More Proof that Obamacare is Working!

As we already pointed out, Obamacare is working on every front.  Over 27 million have gained coverage through the law, and a million more have signed up during the first month of this enrollment  period. Hospital accidents are down, and so is healthcare spending. The reduction in healthcare spending over the last few years lead the CBO to reduce its estimate of Medicare spending into the next decade, and expanded the lifespan of the Medicare trust fund.

And all this has occurred while slowing the cost of premiums. And one of the reasons premiums are being kept in check? A provision of the law called the Medical Loss Ratio (MLR). This provision is designed to force insurers to reduce adminstration costs, which are much higher in the private sector than public insurance programs like Medicare, or send rebates to customers. MLR requires health insurers to spend at least 80% of their premium revenue on patient care. Any amount below that and insurers must send rebate checks to their customers.


A new report shows that MLR is having its intended effect. Insurers are reducing their adminstrative costs and passing the savings onto consumers. Talking Point Memo reports: 

"The medical loss ratio requirement and rate review mandated by the ACA put downward pressure on premium growth," officials from the federal Centers for Medicare and Medicaid Services wrote in their report. Overall private insurance spending, of which premiums are a part, grew at a 2.8-percent rate -- the lowest since at least 2007.
As Larry Levitt, vice president at the non-partisan Kaiser Family Foundation, put it to TPM in an email: "That is how it's intended to work."

 And, yet, here is the all important meme-worthy observation:

"I think it has had a substantial downward effect on premium growth, frankly more than I expected when the health law passed," Levitt said. A year ago, the group examined MLR's effect and estimated that consumers collectively saved as much as $2.8 billion in premiums in 2011 and 2012.

As rage-filled Tea Party fanatics continue to wail and gnash their teeth over Obamacare, the rest of us can celebrate the fact that we fought for and got through a piece of legislation that is making America a better and a healthier country. And it is not just physical health. Containing healthcare costs makes us an economically stronger country. We spend a higher percentage of our GDP on healthcare than any developed country. So, the Affordable Healthcare Act (Obamacare) is important to this country for more than its moral purpose of increasing access to healthcare, but also for the long term economic benefit of reduced healthcare costs.