There's an 80/20 rule in the ACA [0] where at least 80 percent of the premiums paid must be spent on healthcare costs, otherwise the difference between 80 percent and the actual amount paid must be returned.
Sounds great, until the insurance companies figured out that the best way to make more profit with this profit cap is to pay out more and increase the premiums accordingly. [1] Obviously, the hospitals don't mind that either.
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This doesn't make sense to me. Insurance in a collective risk pooling scheme. How do they take a cut when they are the ones paying out?
There's an 80/20 rule in the ACA [0] where at least 80 percent of the premiums paid must be spent on healthcare costs, otherwise the difference between 80 percent and the actual amount paid must be returned.
Sounds great, until the insurance companies figured out that the best way to make more profit with this profit cap is to pay out more and increase the premiums accordingly. [1] Obviously, the hospitals don't mind that either.
[0] https://www.healthcare.gov/health-care-law-protections/rate-...
[1] https://www.aeaweb.org/research/regulating-health-insurers-a...