Yesterday I heard a Rush Limbaugh called who I have heard several times on his show. She is an insurance company insider and the beginning of the media screw up saying Rush would move to Costa Rica if Health Care Deform passed. He (in context) said he would seek medical treatment in Costa Rica.
This is a long interview so I urge you to listen to it. Rush’s caller’s comments reflect the TRUE intention of this legislation and what we all need to question at every TOWNHALL over the Easter Break. This is powerful ammunition.
The caller makes reference to an industry term, the 65-45 rule, that needs some clarification. If you add these numbers, they add up to 110 percent. I think the answer is that each number can vary a few percentage points but the total can’t be more than 100%. Maybe the rule represents the outside limits? Maybe the numbers reflect some things that apply to both. Bureaucracies work in mysterious ways. I hope Rush will clarify this.
Stacy, Our EIB Insurance Expert
March 23, 2010
Listen To It! WMP | RealPlayer
BEGIN TRANSCRIPT
RUSH: Stacy in hiding… is this our insurance babe? Stacy, welcome back. Great to have you here.
CALLER: Hey, Rush.
RUSH: Do you know you have gotten me into so much fun hot water?
CALLER: I know, I’ve heard!
RUSH: Do you know how you did that?
CALLER: I did by coming on about Costa Rica.
RUSH: You came on and you told me that your insurance company was setting up medical operations in Costa Rica, you’re going to take the doctors and everything down there and you’re going to sell insurance policies if this thing all happened to your customers, and included in the premium would be trips to Costa Rica for medical treatment and so forth. So after having heard you say that, another caller asked me, “What are you going to do if it passes?” “I’m going to go get treated in Costa Rica.” And so now everybody thinks I said I’m leaving the country for Costa Rica. So I need to ask you, how soon are you going to get those clinics set up so I can go?
CALLER: Well, I’m afraid that even that’s not going to save us.
RUSH: Oh, no.
CALLER: I’ve gotta revise my estimate. We may last two to three years, tops, and let me tell you why. The 85-15 provision that has just been signed into law an hour ago –
RUSH: Yeah?
CALLER: — by definition of every state and federal insurance regulator makes us financially unsound.
RUSH: All right, now, I have to take a break here and I want to ask you if you can hold on ’til the top of the next hour where we will get your details on this without any time constraints. Can you hang on?
CALLER: I’ll skip a bit of a meeting, sure.
RUSH: You tell ‘em it will be worth it.
CALLER: Okay.
RUSH: Tell ‘em it will be worth it, and if you can’t, you tell Snerdley and we’ll call you back when you have time, okay?
CALLER: Okay, thank you, dear.
RUSH: You bet.
BREAK TRANSCRIPT
RUSH: Now, we welcome back from “in hiding” in Atlanta Stacy, who works for an insurance company who’s been keeping us updated throughout this past year on the fate of her industry should this thing pass. Now it has passed. Give us the lowdown, Stacy.
CALLER: Um, we’re going to make it two years, three tops.
RUSH: Explain why and start at the beginning.
CALLER: Okay. For time immemorial, both state and federal regulation — and also just the industry standard — has been a 65-45 percentage arrangement: 65 in claims payment and 45 for administration and claims expense. Withholding that you store for, you know, a major catastrophe or something.
RUSH: This is to pay your claims?
CALLER: No, 65% is to pay the claims. Forty-five percent is for everything else.
RUSH: That means 45% is salaries, administration costs, and the offices, all the paperwork, that kind of thing?
CALLER: It’s that as well as, you know, we are required to keep a certain amount of cash on hand as a percentage of our claims exposure to pay claims.
RUSH: I got you.
CALLER: So, for example, if you have a disaster and you suddenly had 400,000 claims come in, you’ve gotta have the money to be able to pay those claims immediately.
RUSH: Now, I just want to make sure I understand here. State and federal regulations set those percentages?
CALLER: State and federal regulations, yes.
RUSH: So if you wanted to have 85% set aside for claims, you couldn’t. You had to go at 65%?
CALLER: Exactly.
RUSH: If you wanted 30% set aside for claims and the rest were administration, you couldn’t do it. It had to be 65%.
CALLER: That’s illegal, yes. It has to be 65-45, and there’s a couple of percentage either way, but generally when an insurance company falls outside of those guidelines, they are considered financially unstable.
RUSH: Well, who audits you all to make sure you are within the ratio?
CALLER: We’re audited by the state insurance departments, primarily. There are some plans that are audited both state and federally, and then you have your private auditors who will come in as part of the stock market and that kind of thing. So we’re audited often.
RUSH: How often do these audits take place?
CALLER: At least once a year, you’ll have one from the industry auditors, and every three to five perhaps for federal and state.
RUSH: Okay.
CALLER: More often if they think that you’re unstable, they’ll audit you more often. So what Obama just did an hour and a half ago is make every insurance company in the country financially unstable. Remember, the 15% (sic) that we are left has not only to pay salaries, maintenance, upkeep of buildings; it also has to pay the 40% increased taxes that we’ve got. I mean, there’s just no way. You can’t do it.
RUSH: Well, you’re getting a little bit ahead of me here. What did Obama sign that changes this 65-45 split? In what way did Obama now sign you into permanent instability?
CALLER: The provision in the Senate bill requires that all insurance companies pay 85% of premiums collected every year in claims.
RUSH: So the 65 is now 85?
CALLER: Exactly. It doesn’t matter how much we increase the premium, it won’t matter.
RUSH: And just to satisfy my own curiosity, with the mandates that are in this — such as you now being required to insure children on their parents’ policies to age 26 or 27; and now having to insure (or cover) preexisting conditions — what’s that going to do to your current premium structure starting today?
CALLER: That’s my other fear, Rush. I don’t know that November is as big a lock as we would hope and here’s why. Most group plans renew January 1st of every year. Most people won’t see the dramatic premium increases until January 1st. So what they’re going to do is all these people who voted for this — and who likely were swayed by this argument — are going to run around and say, “Well, look, nothing happened. You’re not paying any more. You know, everything’s fine. It was just a bunch of, quote, unquote, ‘fearmongering,’” and I’m afraid they’re going to be reelected.
RUSH: Well, we’ll do with that when the time comes. I think there’s a lot more in this than just those two provisions that have people outraged and upset, and I know that your fear is that the people that supported this are going to show up in droves and vote for Democrats on the theory that none of the scare stories that were told had happened because this delayed until January, but there are other things that we can work with on this. The Democrat Party’s damaged itself in the sense. They just inflicted great harm on the country. Whenever it shows up, it will be realized. Now, I want to take you back to the first thing you said: You originally thought that your industry would survive. You’re speaking industry or just your particular company?
CALLER: I would say 99% of all insurance companies, health insurance companies in the country.
RUSH: Okay. So you originated thought you might have three to five years to stay in business under Obama. Now you said it’s two to three. Why?
CALLER: Because of the 85-15. Plus the additional expenses we’re gonna incur. Additionally, the mandates, what people don’t understand when CMS (which is the Centers for Medicaid and Medicare) push a mandate down on insurance companies, we have to pay to complement those mandates. We don’t know how many of those are in this monstrosity. So we can have our mandate budget doubled, our taxes already up 40% or whatever it is, and our cash flow immediately cut.
RUSH: Well, how can you know in advance of paying any claims? Because they’ve now shifted to 65% that you have to set aside for claims to 85%. How in the world can anybody know in advance of paying claims that it’s going to amount to 85%?
CALLER: Well –
RUSH: Of course 65%? It seems to be like this is a ridiculous dictate made by people that have no clue how your business works.
CALLER: Well, they don’t have a clue. But the way that that amount of money is calculated is you look at the past year, past five years, past ten years, and you see what your claims expense have been those years. Then based on your enrollment and your demographics you project forward into what you expect to be paying in the future, in the next year and the next five years. So you can do that. It’s not precise to a dollar, but you usually get pretty close. What he’s done is by saying, for example, the preventative services now –
RUSH: Those are free. Those are, quote, unquote, “free.”
CALLER: Yeah, exactly.
RUSH: What the hell is a preventative service covered by an insurance company anyway?
CALLER: Well, that would be your colonoscopies, your mammograms, your yearly physicals, your lab work.
RUSH: Oh, so those are free now! So if I want to go get a colonoscopy today and I have an insurance policy, I’m not going to pay for it?
CALLER: Exactly.
RUSH: But you will.
CALLER: Well, we will. We’ll pay out the nose for it.
RUSH: (laughing) Well…
CALLER: I know, bad analogy. I’m sorry.
RUSH: It is Christmas!
CALLER: (giggling) But, Rush –
RUSH: Well, no, I don’t look at a colonoscopy as Christmas. Don’t misunderstand.
CALLER: (giggling)
RUSH: But it is Christmas in the sense that I’m not paying for it. I don’t know how you can stay in business even two to three years with this kind of thing happening to you this year alone.
CALLER: I don’t think we will and that’s why I am seriously considering leaving this industry. I’m updating my resume. You know, people who I work with — even people who voted for Obama and thought he was the greatest thing since sliced bread — are shell-shocked.
RUSH: That just frustrates the hell out of me. Anybody with a brain has no reason to be shell-shocked about who this guy is, but it is what it is.
CALLER: Rush, it’s not him. I didn’t think Congress would sell us down the river like this, especially given the public opinion. When have you ever seen a politician just say, “I don’t care that the public doesn’t like it and I don’t care if I’m reelected”? This is something I have never experienced. I have never seen this, and people that I work with who don’t follow politics, who don’t know what’s going on necessarily, they had no clue this was coming. At least I had an inkling! They had no idea.
RUSH: Well, it’s proof positive is that people who don’t pay attention to politics are now outraged, upset, and don’t quite understand. It’s time to make ‘em understand. This is who Democrats are. This is who liberals are. You realize, too, I’m sure, that the whole purpose of all these new requirements on you is to put you out of business.
CALLER: Oh, absolutely.
RUSH: The whole purpose is to make it unable for you to stay in business financially, and so the government can come in and say, “Okay, well, you know, these damn insurance companies! We never could depend on them. They’re nothing but a bunch of frauds and nothing but a bunch of cheats. They’re still cheating people. They’re still raping people. We’re going to have to do this ourselves.”
CALLER: And you know how many people are going to die in the interim, Rush? I say that in all sincerity, because come January 1st you’re going to see 200, 300% increases in premiums and people are going to drop their coverage. So you’ve got the woman who isn’t going to go get the mammogram or the man who’s not going to get the prostate exam.
RUSH: Wait a minute!
CALLER: People are going to die.
RUSH: I thought the mammogram was free.
CALLER: Not when you drop the coverage because you can’t afford three times the premium. Remember, the premiums are going up because of the government, and jobs are being lost because of the government. If you can’t pay it, you can’t pay it. So people are going to drop it. They’re going to drop their insurance before they drop their mortgage.
RUSH: They’re going to be clamoring to the government to fix the mean-spirited insurance companies for raising the prices so high and that’s where Obama’s going to step in and say, “You know what? We have no choice here but than to do it ourselves,” and then you get dumped on again first and foremost with Obama portraying the government as the savior. Look, I gotta take a break. Can you hang on a couple minutes?
CALLER: Sure.
RUSH: I still have a couple more questions. Stacy, our insurance expert, “hiding” in Atlanta to make the call.
BREAK TRANSCRIPT
RUSH: We rejoin Stacy in hiding in Atlanta from the insurance industry. You said just a minute ago that you’re not all that confident about the November election because all these premium increases, group rates, group policy don’t renew ’til January so all of your out-of-pocket expenses are going to start relatively soon but you can’t raise premiums until January to recoup them, correct?
CALLER: Correct.
RUSH: All right, we just got a story here from The Politico: “Timing Right for Democrats’ Midterm Election Hopes — Voters will get their first taste of the benefits of health care reform only a few short weeks before the November midterm elections. They won’t have to swallow most of the bitter pills until much later — well after President Barack Obama faces voters again in 2012. Match the effective dates of key reform provisions against the election calendar, and it becomes clear that Democrats were as focused on writing a legislative overhaul of the health care system as they were on devising a political road map for selling it to voters.” Now, of course, this story is celebrating the brilliance of the Democrats here. Basically this story is, “Okay, yep, Americans you got screwed, but you’re not going to know it in time to vote the Democrats out,” which is essentially your fear.
CALLER: Yeah, and, you know, Rush, Costa Rica is not going to save us because it doesn’t matter where services are rendered, the law is going to cover any policy sold within the United States. So even though we can send folks down to Costa Rica for care, we’re still going to be under the 85-15 rule, we’re still going to have the additional taxes.
RUSH: Look, all this is academic. You’re not going to be in business.
CALLER: I don’t think it is. That’s why I’m leaving it.
RUSH: Are you the only one that realizes this in your immediate orb within your company?
CALLER: No. Most of us recognize it. The question is, are you willing to move out of state, you know, go somewhere else to find a comparable job, that’s the question now for a lot of us.
RUSH: What comparable job?
CALLER: The technology aspect. The technology that we work with is not used commonly in small shops around or whatever.
RUSH: Yeah.
CALLER: So if we want a position using the technology we use today, we’re going to have to leave, and I don’t know where I’m going to go.
RUSH: Well, it’s a shame. And it’s a shame because all of this was predictable based on the details of the legislation. Stacy, feel free to stay in touch any time to update us on this. We really do value your input on this. You sound very confident and know what you’re talking about. Well, in fact, you know what, Snerdley has a great idea and we’re going to do this. We are going to start collecting our own sob stories, and Stacy you might want to be one of our sob stories. Instead of bringing up individuals who have supposedly been treated harshly because of an unfair country and an unfair insurance industry what we’re going to do is create our own roster of sob story people, small businesses who have been put out of business; small business people whose taxes have been raised making it impossible to stay in business for very much longer; people like you, whose entire industry is being targeted for eventual destruction. We’re going to do people genuinely hurt by the legislation. And believe me, there will be no shortage. If you want to be one of our sob stories, I hope you’re not, but if a sob story happens to you, we, the EIB Network, will happily be your outlet.
BREAK TRANSCRIPT
RUSH: So I got this e-mail question from the subscriber list: “After listening to Stacy, why aren’t the insurance companies not taking out full-page ads detailing all of these deceptive lies to the American people? Why are Wall Street companies not doing the same? Why are they continuing to allow these liberals to demonize them and not fight back?” I can only take a guess, and as far as the insurance companies are concerned, take a look at the stocks. Insurance company stocks right now are skyrocketing and so are drug company stocks because the original few years of this bill mandates 32 million more customers, and the insurance companies are going to pay for them somehow, some way, so they’re excited about this. You jump in on the bubble and you cash out. I mean, even if you think you got five years left in business, maximize it all you can and then get the hell out if you don’t think you can stop it. Anyway, my guess. What do I know?
END TRANSCRIPT
