Whistleblower: 6 Ways Romney's Healthcare Proposals Enrich Insurance Companies and Sicken Americans
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This money also goes into sales and marketing activities to target people they want to have as customers. And they use it to pay underwriters, the very people who determine who to cover and who not to cover, and how much more, for example, to charge people who are older or who are women.
In 1993, the year the Clinton healthcare plan was proposed, insurance companies were spending about 95 percent, or 95 cents on every premium dollar on medical care. That was the overall industry average. That dropped over the years to where the average is down to 80 percent now.
One of the good provisions of the Affordable Care Act sets 80 percent as the floor. Insurance companies are prohibited from spending less than 80 percent and if they do they have to give their policyholders a rebate. And we've seen over the past year -- this is a provision that's already in effect -- they've had to send rebate checks to millions of policyholders because they did go below that threshold. It's an important protection for consumers that would go away if the law goes away.
Brad Jacobson is a Brooklyn-based freelance journalist and contributing reporter for AlterNet. His reporting has also appeared in the Atlantic, Columbia Journalism Review, Billboard and other publications. Follow him on Twitter @bradpjacobson.