# The bomb buried in Obamacare goes off today **URL:** \ **Category:** Great Debates\ **Created:** [December 3, 2011, 8:03pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971 "2011-12-03T20:03:06Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Cisco](https://avatars.discourse-cdn.com/v4/letter/c/ccd318/32.png) [@Cisco](https://boards.straightdope.com/u/Cisco)\ **Post date:** [December 3, 2011, 8:03pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/1 "2011-12-03T20:03:06Z")
[Well, yesterday](http://www.forbes.com/sites/rickungar/2011/12/02/the-bomb-buried-in-obamacare-explodes-today-halleluja/): > [@](#): > > I have long argued that the impact of the Affordable Care Act is not nearly as big of a deal as opponents would have you believe. At the end of the day, the law is – in the main – little more than a successful effort to put an end to some of the more egregious health insurer abuses while creating an environment that should bring more Americans into programs that will give them at least some of the health care coverage they need. > > There is, however, one notable exception – and it’s one that should have a long lasting and powerful impact on the future of health care in our country. > > That would be the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers’ premium dollars they collect—85% for large group insurers—on actual medical care rather than overhead, marketing expenses and profit. > > This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time. Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare—but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry. What does everybody think? I haven’t heard too much about this. I hazily recall the provision from when the bill was being debated, but it certainly isn’t what’s drawn the most attention. If this guy is right, though, it could be absolutely revolutionary. It almost sounds too good to be true. So, will this play out the way the author suggests? Is this part of the bill even up for consideration in the upcoming SCOTUS case? Will the Republicans retake the legislature and overturn it? Will private industry find ways around it? And is Obama brilliant enough to have planned it exactly this way from the start? If all goes smoothly, this could skyrocket his reputation within a generation. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [December 3, 2011, 8:10pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/2 "2011-12-03T20:10:25Z")
I can only hope it utterly destroys for profit health insurance. I am not holding my breath, though. Too much money is available to throw at Congress to find some way around the law. I think SCOTUS is only considering the individual mandate provision. ---
**Author:** ![Cisco](https://avatars.discourse-cdn.com/v4/letter/c/ccd318/32.png) [@Cisco](https://boards.straightdope.com/u/Cisco)\ **Post date:** [December 3, 2011, 8:12pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/3 "2011-12-03T20:12:17Z")
> [@Fear\_Itself](#): > > I think SCOTUS is only considering the individual mandate provision. I think so too. Could the individual mandate have just been a red herring to distract from the real purpose of the bill? It’s almost too Hollywood. Fucking hilarious if that’s how it turns out, though. I don’t like sneaky politics, but this is for the greater good as far as I’m concerned. ---
**Author:** ![MilTan](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@MilTan](https://boards.straightdope.com/u/MilTan)\ **Post date:** [December 3, 2011, 8:25pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/4 "2011-12-03T20:25:19Z")
I think to be effective, it’d need to be tied to pretty strict oversight of premium increases by health insurance companies. Here’s why: overhead is not directly proportional to the amount of money brought in through premiums. Bringing in twice as many premiums (especially from the same number of accounts) doesn’t double the management overhead. So if a health insurer needs to make $X in overhead to keep the lights on, they can always jack up their premiums until $X is 15% of the total. Now, this also increases the amount of money that will be paid out for medical services, but I doubt hospitals and doctors will mind having more money thrown their way to make the MLRs (medical loss ratios) balance out. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [December 3, 2011, 9:38pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/5 "2011-12-03T21:38:18Z")
15% of all medical premiums is a pretty mind-boggling amount of money. I’m pretty skeptical that insurers are going to be unable to survive on that. And the linked article doesn’t provide any actual numbers to argue thats the case. Like what the percentage is currently. Its basically just his say-so that this will be some sort of death-nell for insurance companies. According to [this](http://www.nejm.org/doi/full/10.1056/NEJMsa022033#t=articleResults), the amount was something like 11.7% for US private insurers in 1999. I call BS. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [December 3, 2011, 9:56pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/6 "2011-12-03T21:56:52Z")
I would imagine that the larger companies like this the most and fail to see how this spells their death in any way. The cost of marketing is not much more for a huge company than for other large group insurers quite a bit smaller. Therefore the larger company has more of that 15% not spent on “actual medical care” to put as profit. Competitive advantage to the larger firm. Also note that “actual medical care” includes the broad category of “activities that improve health care quality”. Outreach from insurance company hired nurses that happen to promote the company along the way can be included in that group I think. According to [this article](http://healthaffairs.org/blog/2011/12/03/implementing-health-reform-fine-tuning-the-medical-loss-ratio-rules/) > [@](#): > > insurers that fall short of the target must rebate to their enrollees an amount equal to the product of the difference between their actual medical ratio and the statutory target multiplied by their premium revenues That penalty is not so large as to represent a deathknell. In any case, [per the GAO](http://www.gao.gov/products/GAO-12-90R) this bomb is no huge explosion as most of the insurers have already adapted in anticipation: > [@](#): > > Private Health Insurance: Early Indicators Show That Most Insurers Would Have Met or Exceeded New Medical Loss Ratio Standards > GAO-12-90R October 31, 2011 So predictions of “the death of large parts of the private, for-profit health insurance industry” may have been somewhat exaggerated. At most small sections of the industry will need to modify their practices modestly. ---
**Author:** ![drewtwo99](https://avatars.discourse-cdn.com/v4/letter/d/d07c76/32.png) [@drewtwo99](https://boards.straightdope.com/u/drewtwo99)\ **Post date:** [December 3, 2011, 11:21pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/7 "2011-12-03T23:21:43Z")
This is not nearly as big of a deal as people make it out to be. For profit, private insurance companies will do just fine and will continue to do just fine. The affordable care act was a huge win for them and they know it. That’s why their stock prices went up after passage, and that’s why it passed in the first place. Insurance lobbyists practically own congress singlehandedly, and of course they wouldn’t let something pass that would destroy them. But then again, I have been wrong before. Maybe I’m wrong again on this one. ---
**Author:** ![Amasia](https://avatars.discourse-cdn.com/v4/letter/a/ba9def/32.png) [@Amasia](https://boards.straightdope.com/u/Amasia)\ **Post date:** [December 4, 2011, 4:26am UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/8 "2011-12-04T04:26:33Z")
Just as a note, even though the MLR rule is called a “Final Rule”, it really is not final. Individuals/organizations can submit comments on it, which it will integrate into a truly final rule. It’s doubtful that the 85/80% number will change. However, the initial version of the Administration’s ACO rule had such a strongly negative reaction that it included some major changes in its second version. ---
**Author:** ![Mekhazzio](https://avatars.discourse-cdn.com/v4/letter/m/b38774/32.png) [@Mekhazzio](https://boards.straightdope.com/u/Mekhazzio)\ **Post date:** [December 4, 2011, 4:40am UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/9 "2011-12-04T04:40:51Z")
> [@drewtwo99](#): > > For profit, private insurance companies will do just fine and will continue to do just fine. The affordable care act was a huge win for them and they know it. That’s why their stock prices went up after passage Indeed. 15% of an enormous number is not exactly strangulation. It’s far too generous, considering that it’s entirely waste. That 15% is money paid for the purposes of health care that is not, in fact, being used for health care. If a government program had that kind of overhead, it would rightly have a crusade launched to reform it. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 4, 2011, 6:39am UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/10 "2011-12-04T06:39:52Z")
> [@Cisco](#): > > And is Obama brilliant enough to have planned it exactly this way from the start? If all goes smoothly, this could skyrocket his reputation within a generation. Yes, Obama is the only person in the country smart enough to calculate %. He must’ve learned that in his secret Muslim school in Kenya. ---
**Author:** ![PrettyVacant](https://avatars.discourse-cdn.com/v4/letter/p/49beb7/32.png) [@PrettyVacant](https://boards.straightdope.com/u/PrettyVacant)\ **Post date:** [December 4, 2011, 7:20am UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/11 "2011-12-04T07:20:11Z")
> [@Cisco](#): > > What does everybody think? This person thinks ‘Obamacare’ is an infantile phrase, contributes to yet another important political debate being diminished and reflects really rather badly on the adult using it. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [December 4, 2011, 7:42am UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/12 "2011-12-04T07:42:50Z")
Obombacare! More bang for your buck! ---
**Author:** ![Cisco](https://avatars.discourse-cdn.com/v4/letter/c/ccd318/32.png) [@Cisco](https://boards.straightdope.com/u/Cisco)\ **Post date:** [December 4, 2011, 10:54am UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/13 "2011-12-04T10:54:35Z")
> [@John\_Mace](#): > > Yes, Obama is the only person in the country smart enough to calculate %. He must’ve learned that in his secret Muslim school in Kenya. It’d be more of a strategy thing than a math thing. > [@PrettyVacant](#): > > This person thinks ‘Obamacare’ is an infantile phrase, contributes to yet another important political debate being diminished and reflects really rather badly on the adult using it. I think it’ll blow up in the face of the conservatives who coined it if/when it becomes very popular. I want it to be called Obamacare so they can’t turn around and try to claim it as theirs. ---
**Author:** ![PrettyVacant](https://avatars.discourse-cdn.com/v4/letter/p/49beb7/32.png) [@PrettyVacant](https://boards.straightdope.com/u/PrettyVacant)\ **Post date:** [December 4, 2011, 1:53pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/14 "2011-12-04T13:53:31Z")
eh? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 4, 2011, 2:31pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/15 "2011-12-04T14:31:33Z")
> [@Cisco](#): > > It’d be more of a strategy thing than a math thing. The only “strategy” I see is doing the math. What am I missing? The insurance companies were intimately involved in crafting this bill. The idea that Obama planted some secret “bomb” in the HCRB, unbeknownst to those companies, is about on par with the Birthers claim that he fakes his birth certificate. ---
**Author:** ![Justin\_Bailey](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/justin_bailey/32/8792_2.png) [@Justin\_Bailey](https://boards.straightdope.com/u/Justin_Bailey)\ **Post date:** [December 4, 2011, 4:49pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/16 "2011-12-04T16:49:18Z")
> [@Cisco](#): > > I think it’ll blow up in the face of the conservatives who coined it if/when it becomes very popular. I want it to be called Obamacare so they can’t turn around and try to claim it as theirs. > [@PrettyVacant](#): > > eh? If the health care bill becomes a big hit, and Obamacare takes off as a phrase, the bill will forever be linked with Obama, which is a good thing for future Democrats. For example, look at JFK’s “We will go to the Moon” speech. The man had been dead for six years when the Moon landing took place and he, and the Democrats, still get all the credit. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [December 4, 2011, 5:07pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/17 "2011-12-04T17:07:09Z")
“That would be the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers’ premium dollars they collect—85% for large group insurers— **on actual medical care** rather than overhead, marketing expenses and profit.” > [@Fear\_Itself](#): > > Too much money is available to throw at Congress to find some way around the law. Unfortunately that probably counts as a legitimate medial costs. > [@Cisco](#): > > What does everybody think? My wag is that the 85% (or 80%) wasn’t designed to cut into a company’s profits they way most people would like (see post 2). The cynic in me believes that a bunch of bureaucrats looked at what the current percentage was in all of the companies, added 5% grace, then arrived at 85% (see post 5) . That way idiots without any actual knowledge or perspective feel good, like the government did something. And health insurers feel good because they can now make more money. The rest of us get screwed. Same thing with vehicle fuel efficiency standards. Set lower than what the companies are capable of making, still too high to make a difference, and take effect far enough out to be irrelevant. Another perfectly executed regulation, par for the course. ---
**Author:** ![obbn](https://avatars.discourse-cdn.com/v4/letter/o/d6d6ee/32.png) [@obbn](https://boards.straightdope.com/u/obbn)\ **Post date:** [December 4, 2011, 5:19pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/18 "2011-12-04T17:19:48Z")
I will put in my 2 cents without reading the rest of the comments. I believe that Obama and the staff that wrote this knew exactly what they were doing and that this was one of the intents of the bill. It seems as if they want to make health care so unprofitable for insurance companies that they will eventually decline to be in the health care market any longer. Then by default the only one willing to write and cover health care will be the Federal Government. Then his dream is complete, the full Government control of the health care industry. ---
**Author:** ![PrettyVacant](https://avatars.discourse-cdn.com/v4/letter/p/49beb7/32.png) [@PrettyVacant](https://boards.straightdope.com/u/PrettyVacant)\ **Post date:** [December 4, 2011, 5:30pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/19 "2011-12-04T17:30:25Z")
> [@Justin\_Bailey](#): > > If the health care bill becomes a big hit, and Obamacare takes off as a phrase, the bill will forever be linked with Obama, which is a good thing for future Democrats. > > For example, look at JFK’s “We will go to the Moon” speech. The man had been dead for six years when the Moon landing took place and he, and the Democrats, still get all the credit. Gotcha! ---
**Author:** ![Fuzzy\_Dunlop](https://avatars.discourse-cdn.com/v4/letter/f/848f3c/32.png) [@Fuzzy\_Dunlop](https://boards.straightdope.com/u/Fuzzy_Dunlop)\ **Post date:** [December 4, 2011, 5:44pm UTC](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971/20 "2011-12-04T17:44:04Z")
> [@John\_Mace](#): > > The insurance companies were intimately involved in crafting this bill. The idea that Obama planted some secret “bomb” in the HCRB, unbeknownst to those companies, is about on par with the Birthers claim that he fakes his birth certificate. One hardly needed to be intimately involved in writing the law; one need only have followed the national debate at a cursory level and read the many articles in national newspapers that discussed it. Hell, I’m quite certain it was discussed right on here on this discussion board many times. [Next page](https://boards.straightdope.com/t/the-bomb-buried-in-obamacare-goes-off-today/604971.md?page=2)