March, 12 2015, 11:00am EDT
For Immediate Release
Contact:
Mark Almberg, PNHP communications director, 312-782-6006, mark@pnhp.org
Health Law Hasn't Cut Insurers' Rate of Overhead Spending: Study
Study finds Affordable Care Act’s requirement that health insurers spend at least 80-85 percent of premiums on actual medical care had no impact in the law’s first three years
WASHINGTON
Despite claims by the Obama administration that the Affordable Care Act will reduce health insurance companies' spending on overhead, thereby channeling a greater share of consumers' premium dollars into actual patient care, insurers' financial filings show the law had no impact on the percentage of insurer expenditures on such things as administration, marketing and profits.
That's the chief finding of a team of researchers, including two prominent physicians on the faculties of the City University of New York's School of Public Health and Harvard Medical School, in an article published Wednesday in the peer-reviewed International Journal of Health Services.
Examining U.S. Securities and Exchange Commission filings of nine large insurers, and using a constant definition of what constitutes an insurer's "medical loss ratio" or MLR - i.e. actual spending on payments to doctors, hospitals, pharmacies, etc. - the researchers found that the weighted average MLR in the three years after the new ACA regulations took effect (2011-2013) was 83.05 percent, compared to 83.04 percent in the three years prior to the reform.
The ACA sets limits on insurers' overhead, mandating an MLR of at least 80 percent in small-group markets and 85 percent in the large group market. However, the Obama administration changed the traditional yardstick by which the MLR is measured.
The new way of calculating the MLR allows insurers to classify most expenditures on "quality improvement" initiatives and the updating of coding systems as medical expenditures, and allows them to subtract most taxes, regulatory fees and "community benefit" spending.
"Rather than go along with the administration's moving of the goal posts to the apparent advantage of the insurers, we stuck with the traditional way financial analysts and insurance firms calculate MLR, namely, by dividing total medical payments by total premium income," said Benjamin Day, the study's lead author.
"What we found is that there's been no significant change in the insurers' MLR since the implementation of the new regulations."
MLRs fell at four firms - UnitedHealth, Humana, Aetna and WellCare - and increased slightly at four others and markedly at one (Centene, a major managed Medicaid contractor).
Day continued: "Although the MLR requirements forced insurers to pay rebates of $1.1 billion in 2011 and $504 million in 2012 - payments that were touted by the Department of Health and Human Services as a major boon to consumers - these rebates constituted less than 0.1 percent of private insurance company revenues and appear to have had no overall impact on MLRs."
Day, whose published research includes articles on labor history and health care reform, currently serves as executive director at Healthcare-NOW, a national coalition of groups advocating for a single-payer health care system.
Senior author Dr. Steffie Woolhandler, professor at the City University of New York's School of Public Health at Hunter College and co-founder of Physicians for a National Health Program, said a number of factors might explain why the ACA hasn't raised MLRs.
"Most plans already met the MLR requirement from 2007-2009, even without the MLR redefinition in the ACA," Woolhandler said. "Moreover, self-insured employer plans, which accounted for 60 percent of all covered workers in 2011, were entirely exempt from the MLR requirement. In addition, a number of exemptions and adjustments were granted to a wide spectrum of plans and to several states, temporarily nullifying the new mandate."
Woolhandler observed that traditional Medicare's overhead is about 2 percent, i.e. 98 percent of Medicare's spending goes toward medical care. "The ACA is too lenient on private insurers, sets too low a bar for their payments for actual care, and provides them with too many loopholes.
"The lesson is clear," she said. "We need to adopt a publicly financed, improved Medicare for All."
"The Affordable Care Act and Medical Loss Ratios: No Impact in First Three Years," Benjamin Day, M.A., David U. Himmelstein, M.D., Michael Broder, B.A., Steffie Woolhandler, M.D., M.P.H. International Journal of Health Services, Vol. 45, No. 1 (January 2015).
The full text of the article is available at the links above or from Mark Almberg at mark@pnhp.org.
Physicians for a National Health Program is a single issue organization advocating a universal, comprehensive single-payer national health program. PNHP has more than 21,000 members and chapters across the United States.
LATEST NEWS
Aid Coalition Says Gaza Cease-Fire Needed to Avert 'Catastrophic' Middle East War
"To avoid the security situation spiraling out of control, all efforts must be made to ensure de-escalation through political and diplomatic means alone."
Apr 16, 2024
A coalition of more than a dozen humanitarian groups on Tuesday stressed the need for an immediate cease-fire in the Gaza Strip following Iran's retaliatory attack on Israel, which has been waging a devastating war on the Palestinian enclave for more than six months.
The humanitarian groups—including International Rescue Committee, Norwegian Refugee Council, Save the Children, and ActionAid—said in a joint statement that "recent escalations in the Middle East are unprecedented and risk regional conflagration, threatening the lives of millions of civilians."
"To avoid the security situation spiraling out of control, all efforts must be made to ensure de-escalation through political and diplomatic means alone," the statement reads. "A regional conflict would be catastrophic for the Middle East, where millions are already affected by existing crises due to conflict, displacement, poverty, and climate change."
The groups argued that escalating tensions between Israel and Iran "are closely linked to the ongoing conflict in Gaza," underscoring the need for "an immediate and permanent cease-fire" to "prevent further human suffering and to de-escalate tensions in the region."
"This latest round of violence was predictably fueled by decades of impunity for state violations of a most fundamental global rule: the prohibition on the use of force."
The statement comes days after Iran launched hundreds of drones and missiles at Israel over the weekend in response to the Israeli military's bombing of Tehran's consulate in the capital of Syria earlier this month—an attack that killed diplomats and a senior Islamic Revolutionary Guard Corps commander.
United Nations experts said Tuesday that both Israel's consulate attack and Iran's retaliation violated international law. The experts also said an Israeli military response to Iran's missile and drone attack would be illegal.
"This latest round of violence was predictably fueled by decades of impunity for state violations of a most fundamental global rule: the prohibition on the use of force," the experts said.
The broader Middle East conflict stemming from Israel's assault on the Gaza Strip now involves at least 16 countries, and Iran's retaliation against Israel led war hawks in the U.S. to call for further escalation—including a direct U.S. attack on Iran.
Israel, for its part, has pledged to "exact a price from Iran" in response to the firing of missiles and drones, most of which were intercepted with U.S. help.
The humanitarian coalition warned Tuesday that any further military exchanges would risk disaster and implored all parties involved to "immediately work towards de-escalation."
"Drawing on our extensive collective experience in the region, we understand that crises in the Middle East often have far-reaching consequences beyond its borders," the groups said. "A regional conflict would likely result in significant global ramifications, including forced displacement and migration, disruptions to global supply chains, and impacts on energy supplies."
Keep ReadingShow Less
'Should Be a Global Wake-Up Call': Coral Reefs Suffer Fourth Mass Bleaching Event
"The announcement of the fourth global bleaching event is an urgent call to do two things: reduce greenhouse gas emissions and work together to prioritize resilient coral reefs for conservation."
Apr 16, 2024
Scientists said Monday that the world's coral reefs are facing a fourth global bleaching event as the fossil fuel-driven climate emergency pushes ocean temperatures to record highs, imperiling the critical underwater ecosystems that sustain thousands of species.
The National Oceanic and Atmospheric Administration (NOAA) and the International Coral Reef Initiative (ICRI)—which NOAA co-chairs—said they documented coral bleaching in the northern and southern hemispheres of every major ocean basin on Earth between February 2023 and April of this year. It could be the worst global bleaching event on record.
"Since early 2023, mass bleaching of coral reefs has been confirmed throughout the tropics including Florida in the U.S.; the Caribbean; Brazil; the eastern Tropical Pacific (including Mexico, El Salvador, Costa Rica, Panama, and Colombia); Australia's Great Barrier Reef; large areas of the South Pacific (including Fiji, Vanuatu, Tuvalu, Kiribati, the Samoas, and French Polynesia); the Red Sea (including the Gulf of Aqaba); the Persian Gulf; and the Gulf of Aden," the organizations said in a statement.
"NOAA has received confirmation of widespread bleaching across other parts of the Indian Ocean basin as well, including in Tanzania, Kenya, Mauritius, the Seychelles, Tromelin, Mayotte, and off the western coast of Indonesia," they added.
"More than half the reefs on the planet have basically experienced bleaching-level heat stress in the last year."
Derek Manzello, coordinator of NOAA's Coral Reef Watch, said that "as the world's oceans continue to warm, coral bleaching is becoming more frequent."
Excessively warm water causes corals to expel algae from their tissues, causing the organisms to turn white. While they can recover, such bleaching is evidence that corals are under significant stress and at risk of death.
The latest global bleaching event is the second in the last 10 years and "should be a global wake-up call," Manzello toldThe Washington Post.
"More than half the reefs on the planet have basically experienced bleaching-level heat stress in the last year," said Manzello.
NOAA and ICRI's statement comes as scientists around the world are voicing growing alarm over high ocean temperatures. Research released last month showed that global ocean surface temperatures had broken records every day of the year up to that point, underscoring the need to aggressively rein in fossil fuel production and use.
"Temperatures are off the charts," Emily Darling, director of coral reefs at the Wildlife Conservation Society, said Monday. "While many corals are suffering from extreme heat stress and bleaching, some locations and species show different types of natural resilience. Finding and conserving these priority coral reefs are critical to any global strategy to safeguard the planet's oceans and blue economies."
"The announcement of the fourth global bleaching event is an urgent call to do two things: reduce greenhouse gas emissions and work together to prioritize resilient coral reefs for conservation," Darling added.
Keep ReadingShow Less
Green Group Slams EPA Failure to Curb 'Dangerous Levels of Air Pollution'
"Air pollution standards must protect endangered plants and wildlife, but the agency failed to follow the law, or the science, to fully address this toxic air pollution's harms to the environment," said one attorney.
Apr 15, 2024
The Center for Biological Diversity on Monday lamented what it called the Biden administration's failure to improve "outdated" limits on nitrogen and soot air pollution.
The U.S. Environmental Protection Agency (EPA) proposed keeping existing secondary national ambient air quality standards for sulfur and nitrogen oxides after estimating that new benchmarks previously put forth would result in reduced pollution from sources including coal-fired power plants.
However, Center for Biological Diversity (CBD) staff attorney Ryan Maher argued that "the EPA failed to seize this important opportunity to better protect plants and animals from these toxic pollutants."
"Since the EPA's last review of these pollution standards, the science showing the ecological harm from soot, sulfur, and nitrogen air pollution has become more certain."
"Since the EPA's last review of these pollution standards, the science showing the ecological harm from soot, sulfur, and nitrogen air pollution has become more certain," Maher added. "Rather than aligning its standards with this new research, the EPA has chosen to perpetuate dangerous levels of air pollution."
The Clean Air Act requires the EPA to set primary, or health-based, and secondary, or welfare-based, "national ambient air quality standards" for pollutants including sulfur oxides, nitrogen oxides, and particulate matter—better known as soot. However, the EPA has failed to update the secondary standards for nitrogen and sulfur air pollution for more than half a century. Key portions of the EPA's secondary soot standards also haven't been updated in decades.
According to the CBD:
The agency published today's proposal under an agreement that resulted from a 2022 lawsuit brought by the Center for Biological Diversity and the Center for Environmental Health. That agreement requires the agency to finalize its decision on the air quality standards no later than December 10, 2024.
The agency will hold a virtual public hearing on the proposed rule on May 8.
Critics have also called out the EPA for not completing a mandatory Endangered Species Act consultation with the U.S. Fish and Wildlife Service and National Marine Fisheries Services about how pollution levels allowed under the proposed standards could harm endangered plants and animals.
"Air pollution standards must protect endangered plants and wildlife, but the agency failed to follow the law, or the science, to fully address this toxic air pollution's harms to the environment," Maher noted.
Separately, green groups including Earthjustice, Sierra Club, California Communities Against Toxins, and Southwestern Environmental Law Center on Monday welcomed the EPA's decision to deny an industry petition to delist energy turbines as a major source of air pollution.
"Today's decision upholds critical environmental protections that are essential for safeguarding public health, particularly in communities that have historically borne the brunt of industrial pollution," Earthjustice director of federal clean air practice James Pew said in a statement.
"Keeping pollution control requirements in place is not just a matter of regulatory compliance; it's a fundamental environmental justice issue," Pew added. "EPA did the right thing by rejecting industry's attempt to dodge these requirements and get a free pass to pollute."
Keep ReadingShow Less
Most Popular