Does Obamacare Restrict Insurance Companies' Profits? – YES


General Reference (not clearly pro or con)
The Patient Protection and Affordable Care Act, Section 2718, page 18, "Bringing Down the Cost of Health Care Coverage," signed into law on Mar. 23, 2010, available at the Library of Congress website, states:

"(1) REQUIREMENT TO PROVIDE VALUE FOR PREMIUM PAYMENTS.—A health insurance issuer offering group or individual health insurance coverage shall, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, in an amount that is equal to the amount by which premium revenue expended by the issuer on activities described in subsection (a)(3) exceeds—

(A) with respect to a health insurance issuer offering coverage in the group market, 20 percent, or such lower percentage as a State may by regulation determine; or

(B) with respect to a health insurance issuer offering coverage in the individual market, 25 percent, or such lower percentage as a State may by regulation determine, except that such percentage shall be adjusted to the extent the Secretary determines that the application of such percentage with a State may destabilize the existing individual market in such State."

Mar. 23, 2010 - Patient Protection and Affordable Care Act (HR 3590) (2MB)  



PRO (yes)

The Centers for Medicare and Medicaid Services stated in their Dec. 2, 2011 posting "Medical Loss Ratio: Getting Your Money's Worth on Health Insurance," available at its website:

"Beginning in 2011, the law requires insurance companies in the individual and small group markets to spend at least 80 percent of the premium dollars they collect on medical care and quality improvement activities. Insurance companies in the large group market must spend at least 85 percent of premium dollars on medical care and quality improvement activities. Insurance companies must report their MLR data to HHS on an annual basis so that residents of every State will have information on the value of health plans offered by different insurance companies in their State. Insurance companies that do not meet the MLR standard will be required to provide rebates to their consumers. Insurers will make the first round of rebates to consumers in 2012. Rebates must be paid by August 1st each year."




Emily Berry, Writer for American Medical News, wrote in her Feb. 27, 2012 article "Insurers Think Outside the Policy," available at the American Medical Association website:

"Health plans typically operate under single-digit profit margins overall. The Patient Protection and Affordable Care Act requires them to spend at least 80 cents of every premium dollar on patient care, beginning with 2011, or pay rebates to customers the following year."




William Lazonick, PhD, Director of the University of Massachusetts Lowell Center for Industrial Competitiveness, stated in his Sep. 23, 2010 article "High Health Care Costs Emanate from Business, Not Government," available at the Huffington Post website:

"[The PPACA] takes steps to limit the boundless profiteering that has become customary in the U.S. health care system...

States have two new tools to prevent health plans from gouging consumers. First, 46 states have received grants from the US Department of Health and Human Services to investigate premium rate increases. This funding will give states the resources to review the complicated actuarial explanations filed by insurance companies and to judge whether premium increases are justified. In addition, plans will now be required to devote a minimum percentage of their premium revenue to medical care instead of administration, executive salaries, profits, lobbying and administrative waste. Plans will owe their customers rebates if they fail to spend at least 80 percent (individual and small group) or 85 percent (large group) of premium dollars on medical expenses."




CON (no)


[Editor's Note: Based upon a neutral reading of the Patient Protection and Affordable Care Act and bi-partisan third party analysis, this question seems to have a clear and obvious Pro (yes) answer, and ProCon.org has therefore presented the responses in a single column with no opposing perspective.]