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Old 02-08-2013, 01:26 PM   #57
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Quote:
Originally Posted by BigCatDaddy View Post
They have to pay 80% if they don't pay 80% then it's reimbursed. Regardless is still gives them more money for operating cost assuming everything else equal. If they are currently taking in 100K in premiums and are now paying 60%(60K) out in claims they are going to have to recoup that. So what does insurance company do, raise premiums to 150K so they recoup 1/2 of what they lost by paying 80%. If they can find cuts elsewhere like all important jobs they may have to do that as well.
I'm not going to go back and forth on this all day, I'll just explain one more time that you don't understand this rule.

Health claims have to account for 80% of premiums. Any amount collected in premiums in excess of this amount has to be rebated.

In your example, they initially have to rebate $25k to get down to $75k, since 60/75=80%. After the premium increase, they still need to get down to $75k since their costs haven't changed, so they rebate $75k. Every new dollar that came in has gone right back out.
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