Real Insurance Could Never Operate With An 85% Loss Ratio

Obamacare demands that most health plans operate with a medical loss ratio (MLR) of 85 percent (or 80 percent for the individual market).

Politicians, bureaucrats, and people in general are very fixated on how much of our premiums go to administrative costs, including executive salaries and profits, of health plans. It’s easy to understand a politician winning applause for promising that she’ll ensure health plans spend more of their revenue on patient care.

But there is an even more fundamental question: Why are politicians not attacking other (non-health) insurers who spend only 70, 60, or even 50 cents on the dollar in claims? Surely these insurers are even “greedier” than health insurers.

Read the entire article at John Goodman's Health Policy Blog.

Health Spending Grows, While Premium Growth Accelerates

As I wrote in my last Health Policy Prescription, Obamacare has resulted in increasing administrative costs and margins of insurers.  Here is a shorter, bloggy, version of the article.

Health Reform in Idaho: Say No to Obamacare Exchange Handout

Yesterday, I had the privilege of being a guest of the Idaho Freedom Foundation, which invited me to speak to legislators and civic leaders on the question of how Idaho should respond to Obamacare.

Unfortunately, governor Otter has accepted $20.4 million from the federal government to impose Obamacare in Idaho.

Here is a short video and partial transcript of my remarks.

California Hospitals' Unhealthy Dependence on Government

While many Americans are eager for the U.S. Supreme Court this year to decide the constitutionality of President Barack Obama's health care overhaul, a federal judge in Los Angeles has just made a misguided decision that cuts right to the root of the government's role in controlling people's access to medical care, whether state legislators or federal judges have the power to decide how much to spend from the state treasury and health care providers' unhealthy and unsustainable dependency on government.

Read my entire op-ed on the case, at the Orange County Register.

Benjamin Rush Society Hosts Leadership Development Reception in New York City

As I announced a few month's ago, I have taken on additional responsibilities as the Executive Director of the Benjamin Rush Society, a national society of medical students that has chapters across the country.  The Society's mission statement is posted here.

Due to the initiative of Deroy Murdock, syndicated columnist and member of the Society's Board of Advisors, we hosted a Leadership Development Reception in New York City on January 19.

A report on the event (including a very amateur video) is posted at the Society's website.

I generally do not write about the Society's activities on this blog, or on my own Facebook or Twitter feed, which are dedicated to my policy research.  Nevertheless, I'd like my readers to know that the Society is growing (and taking up more of my time).

The Society has its own Facebook page (here) and it's own Twitter feed (here). If you'd like to keep abreast of the Society's activities, please consider using those media.  In a few days, I will also be setting up an e-newsletter that I anticipate will be published quarterly.  Once that's up and running, I will let you know so that you can sign up for that if you prefer.

What Are the Costs and Benefits of Patents on Prescription Drugs?

On January 23, the Wall Street Journal hosted an interesting debate between Josh Bloom, Phd, of the American Council on Science and Health, and Dr. Else Torreele of the Open Society Foundation. (The link is here, and was free when I last checked. If it disappears behind a wall, the citation is: Josh Bloom & Els Torreele, “Should patents on innovation be extended to encourage innovation?” Wall Street Journal, 1/23/2012.)

Dr. Bloom makes a classical case for patent protection as an effective legal mechanism to incentivize pharmaceutical R&D. And he goes a step further, proposing that more innovative medicines be awarded longer patent protection and less innovative ones shorter patent protection. (It’s an idea with which I’ve noodled, but never figured out how to define the dividing line.)

Dr. Torreele asserts that patents do not prompt innovation, and that the profit motive leads to misdirection of research in favor of profitable markets, thereby neglecting diseases of the developing world.

I vote for Dr. Bloom’s analysis. Read my entire column at Forbes.com: the Apothecary.

If Health Spending is Increasing Slower, Why Are Premiums Increasing Faster?

The short answer: Blame Obamacare.  For the detailed answer, please read this month's Health Policy Prescription here.