Tags: Obamacare | insurer | grocer | rebate

Obamacare Rebates Deceive Consumers Forced to Overpay

By    |   Friday, 19 Jul 2013 07:48 AM

Health insurers have generally set prices based on the cost of covered services. They will never be able to price policies in a way that exactly covers the cost of claims. Some years they will charge consumers too much, and other years they will not charge enough. Over time, it works out that insurers make a fair profit.

At least that is how free markets work. That will change and insurers will now have to rebate premiums if they fail to pay out the minimum amount set by law.

If groceries were priced this way, prices would rise. Imagine that grocers could only make a 20 percent profit. If they make 25 percent, they have to rebate the difference. If they make 15 percent, they do not get to make more next year because the profit is measured by calendar year.

Grocers would raise their prices and view the 20 percent profit as a right. Under simple economic principles, they would try to earn enough to ensure they can send rebate checks to consumers.

This would be especially true if the president praised them for sending the rebates.

That describes health insurance. Insurers must send rebates when they fail to spend 80 percent of premiums on covered services. The president was introduced at a press conference by a woman who received a rebate and lauded the program as proof that Obamacare is a success.

No one mentions that the insurer maximizes profits when a rebate is issued and insurers should be seeking to maximize profits.

Health insurance is now like an income tax, with everyone making small payments throughout the year in the hope that some of their money will be refunded later.

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MichaelCarr
Health insurers have generally set prices based on the cost of covered services. They will never be able to price policies in a way that exactly covers the cost of claims.
Obamacare,insurer,grocer,rebate
283
2013-48-19
Friday, 19 Jul 2013 07:48 AM
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