ANOTHER ONE BITES THE DUST!
Patrick Casale
Insurance Broker contracted around the United States offering health insurance coverage. I specialize in helping Small to Large Businesses attain quality affordable health insurance for their employees.
Prior to the adoption of OBAMACARE aka THE AFFORDABLE CARE ACT I can only remember 1 possibly 2 carriers folding outright.
Today we learned that FRIDAY HEALTH PLANS not only went into receivership in Nevada, but have been shutdown in Colorado their home state and in North Carolina for insolvency!
This happens when carriers haven't priced premiums accordingly!
Insurance carriers can keep 20% of all premiums in small group & individual markets thanks to the Medical Loss Ratio's "MLR'S" established by the ACA.
What this means in simple English;
Medical Loss Ratio's make all carriers pay out 80% of all the premiums in their block of business and maintain/hold 20% of all premiums for all other expenses. Large group plans must pay out 85% and only can keep 15%.
What this means: If carriers price their business incorrectly, everyone loses!
Insurance carriers are allowed to insulate rates upward and if they don't payout according to this ACA rule, are required to give rebates to those consumers in their blocks of business to ensure they meet the 80% requirement.
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If carriers lose money in any year, they cannot increase premiums to recoup the previous years lost revenues as they did previous to the ACA.
Years ago, carriers were able to properly underwrite and price accordingly. If they had bad years, they'd increase premiums to cover losses. Today we have guaranteed issue! All carriers base premiums on many elements;
Ages, Genders, Smokers, non-smokers, that's it!
However, if you have a major medical illness are pregnant, you name the illness, carriers must cover them all even if they could lose money!
What we are seeing around the country is carriers have mastered ways to move services into major medical deductibles or limit access to new high cost prescription medications access. Access to physicians timely has also become a major deterrent and many just don't seek care because of the wait.
I'm often asked what are your solutions to the ACA. Many answers abound, but simply put, lets get the government out of the insurance world, lets get a grip on how "Big Pharma" dictates the cost of pharmaceutical's and how about we re-evaluate the plan designs and go back to the drawing board!
These are come of the ideas that better get considered.