Now, I have several problems with this little nugget, and we'll address them, but first I need to address a problem I have with Americans in general, or, at least, with those interviewed for this story. The problem is encapsulated in this paragraph:
"It almost looked like junk mail," said Ms. Harkenreader, a tax accountant in Mountain Top, Pa., who said she did not love the overall law but was pleased with the unexpected windfall. "If this is part of Obamacare, I'm happy that somebody is finally coming down on the insurance companies and saying, 'Look, let's be fair here.'"
Fair, Ms. Harkenreader? Fair? You want fair, how about you pay 100% of your own medical bills? I'm willing to bet your patient responsibility plus your premiums is far less than you would pay in normal medical treatment each year. If you think what you're getting charged is so "unfair," look for a different insurance company. If that still doesn't work, then stop buying insurance and pay it all yourself. You'll learn really quickly what "fair" looks like.
Now, then, that said, let's look at the problems with this policy.
Insurance Companies Need That Money
The first and foremost problem with this policy is that the insurance companies were actually using that money. They were paying employees, yes, but they were also developing new products and strategies. Many of them were adding it to savings accounts so they could remain solvent if something catastrophic occurred where they didn't make money for some reason.
Remember, Insurance is about risk. The Insurance companies are accepting the risk that you will get sick, or will be injured, or any number of things. Act of God exclusions aside, if something catastrophic occurs, the Insurance companies will be out a great deal of money. They save up for just such an occurrence. That's something I'd think we'd all support, given what happened to the Mortgage companies not too many years ago.
It Punishes Their Success
Name another industry that has to give rebates to its customers for successfully shepherding their investments. Seriously, that's what this amounts to. Even worse than that, though, is this: virtually every insurance company in the United States now has some "wellness" program which provides resources and incentives for its subscribers to get healthy- from losing weight, to smoking cessation programs. When these programs (which cost money) are successful, claims decrease. This policy provides a disincentive for continuing such programs.
It Makes Insurance Companies The Enemy
By forcing the insurance companies to make these ill-advised (for the reasons above, among others) payments, it fosters exactly the sentiments of the Ms. Harkenreaders of the world. The payments are not a nice thing they receive because they didn't use as much health care. Rather, they are something the insurance company stole from you.
This kind of divisiveness is the hallmark of Liberalism. Liberalism cannot survive when people realize that they are responsible for their own behavior and circumstances, and that no "evil corporation" is out to get them. Fostering this distrust is in the best interest of Liberals, because it then leads to people asking for "more regulation" and more laws.
It Makes Employers The Enemy
Hidden within these rules is the fact that most of these checks won't go out to individuals. They will, instead, be issued to the employers who actually pay for the insurance. What those employers do with the money is then up to them.
This puts employers in a Catch-22. They can't count on those premiums, so they can't issue raises. If they try to divide the rebates, someone will always be mad because they think they didn't get their "fair share." If they keep the money, they're an "evil corporation" that is just in it for "the profit." In short, no matter who wins, the employer loses.
It Misses The Point
It's quite obvious that politicians don't understand health insurance. I was in the industry for years, and I only just scratched the surface. The fact is that insurance companies still have to be competitive, even with the restrictions imposed upon them by the US Congress. These restrictions include, but are not limited to, the inability to sell across state lines, and various coverage mandates.
Despite this, insurance companies, especially those catering to businesses, have to remain highly competitive. Any that do not will lose subscribers, and eventually go out of business, just like any other business which fails. So when an insurance company charges a premium, that amount is calculated fairly precisely to do three things. First, to help spread the risk associated with the policy so that all legitimate claims are covered. Second, to pay administrative costs like facilities, utilities, and payroll. Third, to reinvest in the company, either through new offering R&D or by saving against future claims.
This policy completely ignores the third part. Without that money, though, new products don't come to market. Health Savings Accounts were not an invention of Government; the Government took an idea Insurance Companies had created and proven to work, and modified it to work for Government (for a given value of "work.") Those same wellness programs previously mentioned cost money, but provide no revenue. Insurance companies have to have a hedge against disaster. The policy completely ignores all of these things in pursuit of the kind of divisiveness that Liberals love.
Rebates from insurance companies are not something to rejoice over, but yet another symptom of the disease that is ObamaCare.