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TOPIC: "Obamacare in Tomorrowland" (Cohn, TNR 10/21/10) *** A must read! ***


Diamond

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"Obamacare in Tomorrowland" (Cohn, TNR 10/21/10) *** A must read! ***
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A Must read.  GREAT SUMMARY OF CURRENT ONGOINGS...

Read @ TNR Blog (Emphasis added)

Obamacare in Tomorrowland

Health care reform has been in the news a lot lately: Judges are ruling on whether the individual mandate is constitutional, companies are announcing changes to their health plans, and congressional candidates are arguing over repeal.

But there’s another big story happening, down in central Florida, where some state-level officials, a handful of consumer advocates, and a whole bunch of insurance industry lobbyists are fighting over how to implement a key part of reform.

[SNIP]

The issue at hand is how insurance companies spend their money. All insurance carriers have what is known as the “medical-loss ratio.” It refers to the amount of revenue that insurers eventually devote to actual patient care. Wall Street and the industry like that number to be as low as possible, because, among other things, a low MLR leaves more room for profits. Consumer advocates prefer the MLR to be as high as possible, because it rewards social responsibility and, to some extent, efficiency.

The architects of health care reform largely saw things from the standpoint of consumer advocates. And the Affordable Care Act reflects this. It sets a minimum standard for every insurer’s MLR--80 percent for plans that cover individuals and small businesses, 85 percent for plans that cover large groups. That's higher than many commercial insurers run now. Once the regulations are in place, insurers that don’t bring their balance sheets in line with the MLR standard will have to provide beneficiaries with rebates.

The significance of this regulation is the subject of some debate, even among like-minded advocates of reform. I know experts who think it’s a critical bulwark against high premiums. And I know experts who think, ultimately, it will have little effect. But even those experts who downplay the policy importance see it as a bellwether. If you watch how the administration decides to write and enforce this regulation, they say, you’ll get a sense of how it intends to handle other regulations--and, more generally, the way it intends to deal with the insurance industry over the next few years.

That brings us to the big debate taking place in Florida. Like so many other elements of the Affordable Care Act, the MLR regulations leave a lot of room for interpretation and discretion. Although the law sets the numerical targets for what insurers spend, it doesn’t stipulate exactly how the government should tally and process those numbers. Instead, it lets the Secretary of Health and Human Services (i.e., Kathleen Sebelius) make those decisions. And it instructs her to consider, although not necessarily follow, the recommendation of the National Association of Insurance Commissioners--the group meeting now at the Gaylord Palms Resort, just down the road from Disney World.

The group has already laid down a template for what the regulation should look like. And, overall, the template is closer to what the consumers want than what most insurers and their allies want. But with a final vote scheduled for Thursday, representatives for industry groups have been lobbying furiously to weaken the regulations. [SNIP]

[SNIP]

But it’s not clear whether they’ll succeed. Nor is it clear how the administration will react if they don’t. Yes, the administration wants a tough set of regulations that will make insurers behave;. But it also wants to avoid headlines about insurers threatening to drop plans because “Obamacare” was too tough on them. I don't have a great fix on how this debate is playing out internally, but I gather not every official within the administration agrees on how to reconcile those goals.

So stay tuned, on Thursday and beyond...


Full article @ TNR Blog

====================

My thoughts:

MLR is the heart of the Health insurance reform. With two simple percentage numbers, it forces major restraint on the health insurance industry and forces them to put more of their money into health CARE, less into administration.

MLR needs to work in favor of the consumers... and it is only through that that we will get Health CARE Reform.  The REGULATION implementing MLR requirement of the legislation will need to make this happen.  Any oversight body governing this needs to be ever-watchful to not let up on MLR.  This is all-important.  Keep a close eye on MLR related regulations and oversight action.

 

==

Here is Jonathan Cohn's prior related article

Get Ready for Sebelius v. Insurers (Cohn, TNR, 8/17/10)



-- Edited by Sanders on Thursday 21st of October 2010 03:17:02 AM

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Democracy needs defending - SOS Hillary Clinton, Sept 8, 2010
Democracy is more than just elections - SOS Hillary Clinton, Oct 28, 2010

Madam Secretary Blog at ForeignPolicy.com
Project Vote Smart - Stay informed and engaged!


Platinum

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If it is anything like the credit card reform, we're screwed. 3 of my department store cards just sent out notices that due to the credit card reform act, they were raising my rates by 3 percentage points. I've cut them up instead of canceling, and once they are paid off, they can count me out as a paying customer period.

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Diamond

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MLR actually should restrain Insurance companies from overcharging. Every $100 they get from the insured will have to spend $85 into actual health care service. That leaves very little for administrative spend, advertising and profit. 

I expect - and hope that --
  • the insurance industry will majorly reduce their on-air advertising and mostly market services through the Health Insurance Exchanges and compete heavily with each other through these exchanges.
  • a massive vertical integration to take place in the health care delivery sector so we see more local health care providers and local hospitals merging to reduce administrative costs, as well as more electronic and non-electronic methods to get care data from primary care providers to hospitals, etc.
I am already seeing less health insurance plan advertiements now than a year ago (when they were trying to get as many as possible signed in BEFORE the plan went into effect so they can be under the existing plan provisions perhaps). Are you?

__________________
Democracy needs defending - SOS Hillary Clinton, Sept 8, 2010
Democracy is more than just elections - SOS Hillary Clinton, Oct 28, 2010

Madam Secretary Blog at ForeignPolicy.com
Project Vote Smart - Stay informed and engaged!
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