Obama Approves New Health Insurance Rules
by Gina Kolite in Health News on Dec 16, 2010
The Obama administration has issued new federal rules regarding health insurance companies. The new federal rules will require these companies to “spend more on medical care and allocate less to profits, executive compensation, marketing and overhead expenses.”
According to the administration, the newly issued rules will actually benefit the consumers, “vastly expand federal authority to direct the use of premiums collected by companies” such as Aetna, Humana, UnitedHealth and Wellpoint. This is the first mandate done by the federal government and considered to be the new national health care law.
Kathleen Sebelius, the secretary of health and human services, stated, “Millions of Americans will get better value for their health insurance premium dollar.” She further added that there will be nearly 75 million people who would be protected by the rule. This is cut down to 10.6 million for individual policies, 24.2 million with small-group coverage and 40 million that will be covered by large employers.
According to the rule, starting next year, the individual and small-group markets must be spending “at least 80 percent of their premium revenues on medical care and activities to improve the quality of care.” For the large group markets, they must spend at least 85 percent of premium dollars for the same purposes.
The chief author of the rule, Mr. Jay Angoff said, “We are just trying to implement this regulation.” He added that the health insurance companies should be able “to meet the standards because their profitability and reserves are at an all-time high.”
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