Guam – Not all island insurers will be paying a rebate to their subscribers next month.
TakeCare Insurance will not be paying out any rebates. Instead, the insurer has awarded $15-million dollars to a small group of shareholders in what critics charge is a loophole that has enabled the company to syphon off premium profits that should have been returned to subscribers.
Much has been made of the $11.9 million dollars that Selectcare will be paying to its subscribers on August 1st. $8.2 million of that is going to GovGuam and individual GovGuam employees.
The rebate is required under Obamacare which limits administrative costs, like office expenses salaries and management bonuses to just 15% of the total premiums you pay to your insurance company.
The remaining 85% must be spent on medical coverage, 80% for small insurance plans. If an insurer spends anything less on medical care, they must give back the difference to their subscribers who paid the premiums. That is the Medical/Loss ratio rule.
Calvo SelectCare Adminstrator Frank Campillo has said that the large rebates they have to pay back to their subscribers are the result of a conservative strategy initially adopted by the company in the face of the uncertianty of ObamaCare’s impact.
He has rejected criticism that SelectCare overcharged subscribers saying “We priced for worse and hoped for the best.”
However not all island insurers are paying out rebates. While SelectCare is returning $11.9 million in premiums to its subscribers, NetCare is not required to pay any rebate.
As Admisntrator Jerry Crisostimo explains, they examined the requirements of Oabamacare and priced their plans and premiums accordingly. NetCare did not exceed the limitations of the Medical/Loss ratio rule.
However TakeCare is a different story. TakeCare won’t be paying anything back to its subcribers. Instead, the company has awarded more than $15-million dollars to its shareholders.
The figure can be found in the companies annual 2011 audited financial results, a public document on file at Rev and Tax. The audited results show TakeCare with $19.7 million in liabilities, $11.3 million of which are listed as being unpaid claims to its subscribers.
But it has chosen to pay itself, its shareholders, $15-million dollars.
The company officers are listed as Joseph Husslein, June Mair, Lucio Almira, George Chiu, Jerry Cho Yee Tan and David M. Sablan.
How is it possible that TakeCare can award subscriber premiums to company shareholders, instead of returning excess premiums under the Medical/Loss ratio?
Its called capitation, which critics say allows an insurer to shift administrative costs to sub-contracted medical groups, like clinics. And then count those costs as medical expenses, even if they’re not spent.
We contacted TakeCare for comment on the $15-million they are paying their shareholders. No comment had been provided to us as of news time.