What is the 80/20 rule?
The Affordable Care Act requires insurance companies to spend a minimum of 80 percent of a customer's premium on medical care and quality improvement, allowing for 20 percent to be spent on administrative costs like sales commissions, advertising and overhead. Starting this year, insurance companies were required to let customers know how much of their premiums were actually spent on improving quality and medical care. As a way of insuring consumers get fair value for their healthcare dollar, companies that didn't meet the 80/20 standards were required to provide a rebate to customers for the difference, or the Medical Loss Ratio (MLR.)
Disbursements from insurance companies, which were sent out by August 2012, took the form of a rebate check, a credit toward future premiums, or a lump sum in the account that is used to pay the monthly premium. Group health plan administrators also had the option of applying the rebates in a way that benefitted employees.
As people learn more about Obamacare, inevitably more questions come up. Thankfully the Healthcare.gov website has been updated to include extensive information about the law. In fact, the site now includes a detailed, state by state breakdown for rebate information.
More facts about Obamacare in Arizona
Interestingly, the Arizona Capital Times also published an article about the Affordable Care Act and its effect on Arizona citizens. "'Obamacare,' an ailing economy, rising costs lead to health care revolution," focuses on the improved efficiencies that will occur throughout the medical community. In addition to lowering costs through the economies of scale, such as increasing the number of insured citizens, Arizona will see a positive effect on its "bottom line," through the addition of new technology in the healthcare system. It may take a while to be felt throughout the industry, but advancements in electronic medical records and digital test results have already proven to be wise investments.
How does improved technology improve cost efficiency in Arizona?
At many Phoenix area hospitals and doctors' offices, electronic records systems are being used to track a patient's drug allergies, prescriptions and test results from one caregiver to the next. At the touch of a button, hospitals can get the information they need to keep patients safe while in their care. They can also help find better ways to treat patients who show up at the emergency room on a regular basis. When patients are given better care at the time that need it, patient outcomes always improve.
The Affordable Care Act represents significant changes to Arizona's approach to health insurance and medical care, but it is only one part of the Arizona healthcare revolution. A state that has always had a reputation for being healthy may be in jeopardy of losing that status unless more citizens can afford health insurance, but until they get insurance they will continue to be a drain on the healthcare system. It's a vicious cycle but it is will be addressed, and hopefully solved, once the full ACA law has been enacted.
Despite the seemingly endless backlash against 'Obamacare,' most healthcare organizations believed that the structure of the current system was unsustainable. Continuing down that path would have meant steadily rising costs for people in every state, whether insured or uninsured. That's why the healthcare system needed reform. And while much of the focus of ACA has been tied to insuring all Americans, the drive to make health care more efficient has already had a measurable impact on people's lives.
Source Citation: Tucson Citizen. "Obamacare saves Arizona consumers $27.9 million". (2012) - article no longer available online
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