Why the ‘80/20 rule’ matters

Updated
 

It’s struggling poll numbers notwithstanding, the Affordable Care Act is already doing several things very well. There’s one key quality, however, that may especially relevant in a political context.

We know, for example, that the law offers protections for those with pre-existing conditions and extends coverage to millions of young adults who are now able to stay on their parents’ plans. “Obamacare” has also closed Medicare’s prescription drug “donut hole,” expanded access to contraception, brought new coverage for low-income children, slowed the growth of Medicare spending, and given a boost to small business through tax credits.

And then there’s the 80/20 rule, which we covered on Friday night’s show.

The provision of the law has never really generated much attention – most Americans are convinced they don’t like Obamacare, though they still don’t know what’s in it – but as Rachel explained in the segment, the rebates are likely to get noticed.

A rule created by the 2010 healthcare law and finalized Friday will yield about $1.3 billion in insurance rebates for nearly 16 million Americans, according to estimates by the Kaiser Family Foundation.

The rule, known as the medical loss ratio (MLR), mandates that insurers spend roughly 80 percent of all premiums on healthcare rather than on marketing, executive bonuses or other administrative costs.

The rebates – which the Obama campaign reportedly sees as a “stealth weapon” for improving opinion of the health law – will arrive no later than August 1.

I imagine some folks see the phrase “medical loss ratio” and their eyes glaze over, but you don’t need to be a wonk to appreciate the policy. Obamacare forces insurers to spend 80% of the premiums they receive from consumers on actual health care – not advertising, lobbying, or giving executives huge salaries. When insurers fall short, they’re required to – you guessed it – send you a check for the difference.

It’s the kind of thing that may have an election-year impact.

Over the summer, 16 million Americans are going to get some nice checks in the mail from their insurance company, due entirely to the fact that the much-derided health care law is looking out for consumers, not insurers.

As the segment explained, folks like getting unexpected money in the mail. When they realize it’s because of Obamacare, maybe the law will start to look a little better in those consumers’ eyes.

That checks will hit mailboxes a few months before the election probably doesn’t hurt Obama’s potential benefit, either.

It’s also worth keeping in mind these rebate checks will disappear if/when Republicans kill the entirety of the law, replacing it with nothing: “Some House and Senate Republicans are now admitting what’s been obvious from the start: that the Republican vow to ‘repeal and replace’ Obama’s health law has always been a bait-and-switch.”

Affordable Care Act and Obamacare

Why the '80/20 rule' matters

Updated