This weekend, more than 1,000 insurance lobbyists and executives are converging in Seattle to pressure the National Association of Insurance Commissioners (NAIC) to undercut important new rules intended to control costs and make health insurance more affordable for families and businesses. Bobby Calvan at the Sacramento Bee has the story.
The new health reform law includes a provision (on “medical-loss ratios”) that requires insurance companies to spend on patient care at least 80 percent of health plan premiums collected from individuals and small employers and 85 percent of premiums paid by large employers. The insurance companies are trying to protect their profits and divert premium dollars away from patient care by having non-medical costs, such as lobbying, profits, executive pay and administration, defined as “medical” under this new regulation.
Health Access California has sent Elizabeth Abbott, our director of administrative advocacy, as one of only a handful of designated consumer advocates at the NAIC, to counter the insurance industry attempts at weakening health reform and oversight. California’s Insurance Commissioner Steve Poizner has a voting representative at the meeting; also in attendance are representatives of the Department of Managed Health Care of the Schwarzenegger Administration.
Why is this seemingly obscure regulation important? If the insurers win, they’ll be able to deny people needed care and be able to reclassify the administrative costs of that denial as medical in nature. The insurers fought the law, and we can’t let them undermine the oversight through attempts at weakening the regulations.
The NAIC is due to make its recommendations soon—with a vote expected by Tuesday—to the U.S. Health and Human Services Department. Politico Pulse has also been covering the blow-by-blow.
In a letter to the NAIC president in July, Senator Jay Rockefeller of West Virginia, chairman of the Senate Commerce Committee, urged the insurance commissioners not to succumb to the pressure applied by the industry.
“It is clear that health insurance companies are sparing no expense to weaken this new law and the protection it promises to America’s consumers,” Rockefeller said. “Health insurance companies and their allies have been furiously lobbying the NAIC to write the medical-loss ratio definitions in a way that will allow them to continue doing business as they did before the passage of health reform. The resources health insurance companies are throwing into their effort to weaken the medical-loss ratio appear almost limitless.”
(California Senators Barbara Boxer and Dianne Feinstein both signed onto a follow-up letter with Senators Rockefeller and Franken in support of a strong medical loss ration definition.)
The health insurance industry wants to expand the definition of allowable medical expenses to include costs that are not directly related to the delivery of care and have not historically been classified as medical. Instead of reducing costs and improving the efficiency of their operations, they simply want to change how certain expenses are classified so they don’t really have to alter business practices. Already, WellPoint, the nation’s largest private health insurance company by enrollment and operator of Blue Cross plans in 14 states, including California, has reclassified $500 million in administrative costs as medical expenses.
The amount of money riding on the outcome of this battle is huge. According to a study released last month by Health Care for America Now!, if the new law had been on the books in 2009, the six largest for-profit health insurance companies would have been required to refund $1.9 billion for that year alone.
The medical-loss ratio standards in the Affordable Care Act are critical to curbing the worst of the health insurance industry’s consumer abuses, controlling rising premium costs, and increasing the value of premiums paid by private and public customers.
We’ll be watching closely…