Insurers defend less generous policies, medical loss ratio definitions; Obama to talk with insurance commissioners

Aug 13 2010

News outlets covered various conflicts about how to interpret the new health law.

Kaiser Health News, in collaboration with USA Today, reports on insurers who are defending less generous "limited-benefit" health policies as implementation of the health law proceeds. That law forbids annual dollar limits in such plans. "Starting this fall, most health care policies — except existing policies purchased by individuals on their own — will have to cover at least $750,000 in medical care per person. That amount ratchets up to $2 million by September 2012. But there's a catch. Insurers can seek a waiver from the government to keep their current limited plans if they can prove that offering better benefits would cause significant premium increases or force employers to drop or severely limit coverage." Regulators have to figure out how to protect workers from such policies without making them lose insurance (Appleby, 8/13).

In the meantime, some advocacy groups also want insurers' spending scrutinized. Los Angeles Times: "In a letter to Health and Human Services Secretary Kathleen Sebelius, Consumer Watchdog and the Center for Media and Democracy said that insurers reported less medical spending in recent months ahead of new federal rules that will require the companies to do just the opposite starting next year. Under the nation's new healthcare law, insurers will have to devote at least 80% of premiums to medical claims for individuals and small businesses, and as much as 85% of premiums for policies covering large businesses." Regulations on what constitutes medical spending - as part of the medical loss ratio calculation - are being drafted (Helfand, 8/12).

Politco Pulse: "Sens. Baucus, Dodd and Harkin and Reps. Levin, Waxman and Miller are weighing in on a potentially significant battle within the MLR discussion: what federal taxes should be counted as administrative costs in the calculation? The law says that 'federal and state taxes and licensing or regulatory fees…' should be excluded from the premium revenue number, or the MLR denominator. (Essentially: counted as medical costs.)"

The Hill: "Health insurers had assumed that the healthcare reform law allowed them to write off most federal taxes when calculating how much they have to spend on care for their customers. But in a letter sent Tuesday to the Secretary of Health and Human Services (HHS), the Democratic chairmen of the five panels of jurisdiction over healthcare reform and the Senate Banking Committee argued that only 'federal taxes and fees that relate specifically to revenue derived from the provisions' of the healthcare reform law should be excluded. ... Mike Tuffin, executive vice president of America's Health Insurance Plans, said the industry group didn't know what the effect would be because the plans had assumed the healthcare reform language was 'crystal clear' in excluding 'federal and state taxes and licensing or regulatory fees'" (Pecquet, 8/12).

Meanwhile, The Hill reports in a separate story that the group Health Care for America Now wants insurer lobbyists to disclose their expenditures made at the state level. "The group said the HMO and insurance industries have spent almost $769 million since 2007 on federal lobbying but that no such figures are available at the state level. That's cause for concern, HCAN said, because more than 1,000 health insurance lobbyists and executives are expected to attend the National Association of Insurance Commissioners' annual meeting during the next few days as the state regulators define key reform provisions such as the medical loss ratio" (Pecquet, 8/12).

 The Palm Beach Post reports: "[S]ome insurance companies are urging a more contorted definition, one that would include quality improvement projects, fraud-fighting efforts or even broker commissions, lest they be forced into cutting programs they say are good for consumers. They are also asking federal officials to delay implementing the rule next year, warning that restricting profits will force some companies to stop writing individual policies in some states, or force them out of business altogether. … A vote is planned for Tuesday, and the group's recommendation will go on to the U.S. Department of Health and Human Services for a final OK" (Singer, 8/13).

The Seattle Times: President Obama will talk about health care reform when he attends the commissioners' meeting Tuesday in Seattle (Martin, 8/12).

On another topic related to health insurance, The Associated Press reports that the Obama administration "is planning to upgrade consumer protections for tens of millions of workers and family members covered by health, disability and pension plans, ordering companies to clearly explain decisions on claims and how employees can dispute denials." New rules are expected in the spring. "This year's health care overhaul included a 'patient's bill of rights' that added new appeals protections for people in private insurance plans. But many employees at big companies did not benefit from those improvements. That's because they are in plans considered 'grandfathered' and outside the scope of the overhaul legislation. However, those same health plans do fall within the jurisdiction of the 1970s law and the regulations the Labor Department is now reviewing" (Alonso-Zaldivar, 8/12).