Washington – Citing the need for shared responsibility among all stakeholders in health care reform, U.S. Senator Blanche Lincoln today urged fellow Senate Finance Committee members to support her amendment to even the playing field between health insurance companies and consumers.
“The Senate Finance Committee’s health care reform bill will require all Americans to purchase health insurance coverage in the private market,” Lincoln said. “This will bring millions of new customers to private insurance companies. My amendment evens the playing field so that consumers can be assured that health insurance company executives are not receiving a personal windfall from this new insurance coverage mandate.”
Under current law, businesses can deduct up to $1 million annually per executive. Lincoln’s amendment would set a reasonable executive compensation limit of $500,000 annually that can be deducted as a business expense for businesses that provide coverage meeting the individual mandate requirements. It does not dictate what a business pays an employee, but it does limit the taxpayer subsidies for the compensation.
“This is a fair policy change aimed at lowering insurance costs to consumers and reassuring those consumers that insurance companies are not receiving excessive tax breaks while at the same time profiting from a government mandate,” Lincoln said. “It is my hope that this amendment will encourage the insurance companies to put those additional premium dollars toward lower rates and more affordable coverage for consumers, not in their own pocketbooks.”
Over the last two decades, the medical loss ratio (or the formula that determines what percentage of profits goes to patient care versus administrative and marketing expenditures) has shifted, according to an analysis by PricewaterhouseCoopers. Where health insurers spent more than 90 cents of every dollar on patient care in the early 1990s, that number had decreased to 81 cents of every dollar in 2007.
