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article imageHealth Care Bill Would Target Insurer Spending

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By Aaron Jefferson     Dec 20, 2009 in Politics
Amendments to the health care bill introduced Saturday into the Senate would impose new taxes on the health care industry and mandate a percentage of spending go towards providing care.
A group of amendments, which have yet to be voted on, would require health insurers to spend 85 cents of every dollar towards medical costs, leaving only 15 cents to pay for overhead costs. The requirement of 85 cents on every dollar would apply only for large groups, small groups and individual plans would be required to spend 80 cents on every dollar.
The amount of spending per dollar is known as the "medical loss ratio", and varies widely based on executive pay and other factors. The proposed requirements are hailed by consumer groups as a protection for consumers and a check on the health industry, after years of accusations of price gouging to increase profits. Heath insurers have long refuted the accusation saying premium increases mirror rising health care costs overall.
The health care bill offered Saturday by Senate majority leader Harry Reid, would tax the health care industry $2 billion in 2011 then increasing to $10 billion by 2017. The total tax on the industry remains unchanged from the original bill's $20 billion. A 5 percent tax on cosmetic surgery has been stripped from the bill, and replaced with a 10 percent tax for indoor tanning services.
Senator Reid also allowed the health care industry to retain its anti-trust exemption, whereas the House version removed the exemption. Vermont Senator Patrick Leahy has promised to seek removal of the provision as the bill moves towards a floor vote.
A vote on the proposed amendments is expected Monday.
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