One of the more interesting things the Affordable Care Act did to the private health insurance business was to tell health insurance companies that the Feds were now in control of their profit margins. What does that mean?
Imagine you are the CEO of your own health insurance company. In fact, let’s call it Your Own Health Insurance Company, or YOHIC for short! How do you think you would feel if YOHIC collected $1 billion in premiums over a year, but only had to pay out $500 million in healthcare costs? Sounds like YOHIC is doing really well, turning a 50% profit. Does YOHIC get to keep the rest of the premiums for its own payroll and profits?
Since 2010, the answer to that question is a resounding NO! Read more