Posts Tagged ‘National Association of Insurance Commissioners’

NAIC Commissioner’s Fall Back on Medical Loss Ratio

Wednesday, November 9th, 2011

You know that expression, “Fool me once, shame on you. Fool me twice, shame on me”? Well, it came to mind this past week at the National Association of Insurance Commissioner’s (NAIC) fall meeting in Washington, DC. Just as in March, during the NAIC’s spring meeting in Austin, the NAIC consumer representatives were lulled into a false sense of complacency. “This will be a quiet meeting,” everyone said. “No votes on health care issues.” And that Task Force that had taken up the cause of insurance agents and brokers last summer to push for removing agent compensation from the medical loss ratio (MLR)? “They’re not even meeting,” we were told. “NAIC is done with that issue,” they said.

Imagine our disappointment and surprise when rumors started to swirl Thursday afternoon—the first day of the conference—that the commissioner from Florida planned to introduce a resolution at the NAIC’s final plenary meeting, urging Congress to consider and adopt legislation to “preserve consumer access to agents and brokers.”

When we finally saw a draft, the resolution was alarming. It ignored the considerable data collected by the NAIC’s actuarial task force over the summer, as well as the thoughtful recommendations they had developed. If it passed, it could have given momentum to H.R. 1206, which renders the medical loss ratio (MLR) requirements in the Affordable Care Act (ACA) effectively useless as a tool to help consumers get greater value for their health care dollar.

Once again, the consumer representatives swung into action, alerting the media and networks of advocates in the states. Alerts went out, urging consumer groups to contact their state insurance commissioners and let them know they opposed the resolution. The good news: the advocacy worked. NAIC’s membership agreed to delay a vote on the resolution. The bad news? The issue could come back up on a call scheduled for November 22, which consumer representatives will closely monitor. However, a number of commissioners raised sufficient concerns about the lack of notice that NAIC is likely to revisit their rules for bringing up last-minute resolutions.

MLR wasn’t the only thing on the Commissioners’ minds last week. The subgroup on Exchanges, chaired by Commissioner Sandy Praeger (of Kansas), also met. They heard testimony from one of our own consumer representatives, Sarah Lueck from the Center on Budget and Policy Priorities. She did a great job outlining the importance of a seamless experience for consumers as they seek eligibility determinations and make decisions about enrolling in health plans. The subgroup appears poised to take up model regulations for Exchanges, based on the rulemaking coming out of the United States Department of Health and Human Services (HHS).

In another important development, the regulatory framework task force has begun work on a model state law to implement some of the Affordable Care Act’s 2014 insurance reforms (i.e., guaranteed issue, modified community rating, and elimination of pre-existing condition exclusions). The draft currently applies only to the group insurance market, but members discussed adding individual market reforms as well. Getting this right is really important, because this model law is likely to be the framework many states use to adopt the central reforms of the ACA. The NAIC is taking comments on the first draft, and we would encourage consumer groups to submit comments, particularly those of you from states with protections that are stronger than the minimum standards set by the ACA.

In addition, the NAIC’s health actuarial task force is taking up some challenging topics that will have direct bearing on the success of the ACA:

  • – They will be working with HHS to develop “state-specific” thresholds for reasonable health insurance rate increases. Under the rate review rule, HHS is currently using a national standard of 10 percent (if a rate increase is 10 percent or greater, it triggers an automatic review). Starting in 2012 they will transition to state-based thresholds to better reflect local market conditions.
  • – They will work on recommendations to HHS and states for the ACA’s “3 Rs”—risk adjustment, reinsurance, and risk corridors. Their most immediate task is to finalize comments on a white paper HHS released in September.
  • – They will review data on the use of self-insurance by employers, particularly smaller employers and assess whether it is increasing as a result of the ACA’s insurance reforms. This will be an important study. A number of insurance companies are becoming more aggressive in marketing self-insurance to small businesses, because it allows them to escape key insurance reforms (such as the essential health benefits package and the modified community rating).

Last but not least, I was surprised to hear a couple of broker groups take time out of their Industry Liaison meeting agenda to complain about the NAIC’s consumer representative program. They argued that the consumer reps weren’t “diverse” enough in terms of our perspective on the ACA, complained the media mistakenly report that we speak on behalf of the NAIC, and even suggested many of us have a conflict of interest because some day we might – gasp – take grants to serve as Navigators. For myself, I take their whining as a badge of honor. The fact that they would take the time to complain about our small band of consumer reps suggests that we’re actually having an impact at NAIC.

—Sabrina Corlette, Research Professor
Georgetown Health Policy Institute

Tags: , , ,
Posted in Affordable Care Act implementation, private insurance | 1 Comment »

An unexpected win for consumers at NAIC

Monday, March 28th, 2011

There’s been lots of drama at this year’s first meeting of the NAIC (National Association of Insurance Commissioners) in Austin, TX – way more than any of us consumer representatives to the NAIC expected. The good news, as you may have heard by now, is that the NAIC decided to delay a vote to endorse Congressional legislation that would remove broker commissions from the Medical Loss Ratio (MLR). But that outcome seemed like a pipe dream when the NAIC’s consumer representatives first landed in Austin on Thursday night.

Consumer reps had all been told for weeks that nothing was going to happen at this meeting, no votes would be taken, there’d be just a few hearings – that’s all. So when we got word just the day before we arrived that a number of Commissioners were pushing hard to endorse the Rogers bill we were all taken off guard. Even more alarming, we heard from a number of sources that support for the brokers’ position was so strong the vote was almost a “done deal.”

But after intense advocacy by all sides, including from many consumer groups all around the country, the NAIC decided to take another look at the proposal. After all, not only is it likely that the Rogers bill would result in premium increases for consumers, but there’s simply no evidence that consumers or small businesses are suffering from a lack of access to brokers, or whether reductions in broker commissions are actually a result of the MLR. The only state to provide before and after data on MLRs – Colorado – showed that broker commissions were cut from 20 percent to 10 percent of the premium, suggesting they were way above market norms to begin with.

The NAIC’s health committee will now take a few weeks to actually analyze data in the market about broker commissions and the impacts on consumers and small business owners. We think this is the right approach, and applaud NAIC for taking a more thoughtful and deliberative approach.

Addressing broker compensation is not the only thing NAIC was up to this weekend. The meeting kicked off on Friday with a hearing on health insurance Exchanges. The Exchange Working Group heard testimony from Medicaid experts about some of the very challenging issues states are facing to effectively coordinate public programs with the commercial insurance markets, and got demonstrations of Utah and Massachusetts’ web-based health plan finders. Both states have clearly put a lot of work into designing a web interface that is consumer friendly. That said, by emphasizing how easy their process is for employees, Utah’s presentation was slightly misleading. They neglected to mention that enrollees need to undergo health status underwriting before they can access the website, and they glossed over the difficulty many employees have in choosing a plan among more than 100 different product options.

Joel Ario, head of the Exchange division at HHS’ Center for Consumer Information and Insurance Oversight (CCIIO) also testified. He was asked a number of questions about the feds’ plans if a state doesn’t set up its own Exchange. Ario indicated that HHS has been working on a federal fallback plan, but that HHS does not intend to produce a one-size fits all model. And even if they do have to set up a federal Exchange, HHS would have every intention of working with the states to tailor the Exchange to states’ markets and ensure coordination with state-run public programs such as Medicaid and CHIP.

Next up for the Exchange group is to finalize white papers on issues like financing, adverse selection, and Navigators, as well as to issue additional draft white papers on governance and active purchasing. NAIC consumer reps have submitted extensive comments, and will continue to try to shape NAIC’s recommendations on these issues.

Last but not least, NAIC is looking ahead to 2014 and has a task force working to develop a model state law to implement reforms like elimination of pre-existing condition exclusions, the new premium rating rules, and guaranteed issue. They hope to have a model law adopted by the end of this year, which is pretty darn ambitious.

As for the proposed broker bill, we have a short four to six week reprieve before NAIC takes it up again – and consumer advocates will need to continue to make sure their voices are heard during this process.

– Sabrina Corlette, Research Professor at the Health Policy Institute
Georgetown University

Tags: , ,
Posted in Affordable Care Act implementation, private insurance | No Comments »

Cross Post: Insurance Commissioners Respond to Consumer Concerns

Friday, October 22nd, 2010

This blog was originally posted on Say Ahhh! A Children’s Health Policy Blog

By now many of you have probably heard about the big news coming out of the NAIC meeting this week in Orlando. After seven months of intense debate and negotiation, the NAIC voted in favor of a regulation defining the ACA’s required “medical loss ratio” (MLR). They rejected several amendments that were heavily pushed by insurance companies and brokers, scoring a big win for consumers who deserve better value for their health care dollar.

What hasn’t been reported so widely is all the other work NAIC did this past week, from advancing model state laws on major consumer protections required by the ACA, developing a model law on state insurance exchanges, and defining how an insurer must justify an “unreasonable” rate increase. Here are a few highlights:

– A key NAIC task force adopted model state laws implementing three market reform provisions of the ACA: rescissions, young adult coverage up to age 26, and choice of health professional. These now will be reported up to the NAIC’s “B” Committee, which is the umbrella committee for health issues. The same task force is also developing model laws on: lifetime/annual limits, elimination of pre-existing condition exclusions for children under 19, access to preventive benefits, and grievances and appeals, all of which are ACA provisions that went into effect on September 23, 2010.

– Consumer representatives are urging changes to the model law on the kids’ “pre-ex” provision to encourage states to prevent “child only” health plans from withdrawing from the marketplace. We also made formal presentations applauding Commissioner Sevingy from New Hampshire and Commissioner Kreidler from Washington for their leadership and toughness in requiring their states’ insurers to offer coverage to kids.

The consumer reps also pushed for better notice requirements for health plans that have received a waiver from the ACA’s restrictions on annual benefit limits, so that consumers know that the plan doesn’t provide the full range of consumer protections promised under the health reform law. The NAIC’s working group on state insurance exchanges also met in Orlando. They’ve received a whopping 200+ pages of comments on their first draft of a model state law and sometime within the next two weeks they’ll schedule a conference call to receive oral comments. A few issues were raised in the meeting that are worth watching:

– Coordination with Medicaid. My impression is that the model law will probably not delve into the tricky issues of how the exchanges will coordinate with state Medicaid agencies. When one of the Commissioners asked about this, the chair of the work group, Commissioner McRaith from Illinois, said that they have not been working with Medicaid Directors, and emphasized that it would be a “NAIC Model” and therefore would focus on insurance-related issues.

– Dual regulation. The members of the work group were very concerned about exchanges potentially usurping their traditional role regulating health insurance through rate review, market conduct exams and grievances. They’ll probably add new language to the model that will have a more clear delineation of regulatory roles between state insurance departments and the exchange.

– Pediatric dental. The current draft model doesn’t have any language reflecting the ACA’s provision allowing the inclusion of stand-alone dental plans that offer pediatric dental benefits in the exchange. A representative from Delta Dental pointed that out to the group and Commissioner McRaith asked him to submit legislative language. The consumer reps will keep an eye on this issue as it develops.

– Another key NAIC task force has been working for many months to develop the form that insurance companies will have to fill out if they are proposing an “unreasonable” rate increase. This form will provide unprecedented transparency on rate increases, and will include essential information for consumers and employers to better understand the factors driving proposed increases. The task force finalized the form this week and reported it to the “B” Committee, in spite of last-minute opposition from America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association. Even in the face of many hours of open and inclusive conference calls and meetings, both trade associations claimed that the form had been developed without sufficient industry input.

– Last but not least, the NAIC has created a new working group to tackle the issue of limited benefit plans, or “mini-meds.” A joint effort of the “B” Committee and an anti-fraud committee, the group will investigate whether plans are making misrepresentations about their products and whether they are being sold by unlicensed brokers. Because many of these plans provide little or no real coverage if someone actually gets sick, the group will also be looking into the “utility” of these products for consumers.

– Sabrina Corlette, Georgetown Health Policy Institute

Tags: , , ,
Posted in Affordable Care Act implementation, private insurance | No Comments »

The Insider: ACA Implementation: Partly sunny with a (Supreme) chance of rain

Thursday, October 21st, 2010

This week brought some important developments in ACA implementation. First and foremost is the major win by consumer advocates in the prolonged and multi-pronged struggle to shape NAIC recommendations on Medical Loss Ratios. At the NAIC meeting in Orlando today, consumer advocates beat back attempts by brokers to exclude commissions from the definition of medical expenses, blocked insurers from using high-loss ratios in one state to paper over a failure to meet standards in another, and created a reasonable standard of certainty to establish whether an insurer’s failure to meet the loss ratio was due to under-spending on medical care or unforeseeable random events.

These decisive wins are a case example of the one-two punch that advocates will need in order to influence the numerous federal and state decisions ahead. The consumer victory resulted from the combination of persistent policy advocacy, especially by the NAIC consumer representatives, coupled with a national effort by consumers to reach out to their insurance commissioners and let them know that people were watching (illustrating one of the important axioms of grassroots advocacy: decision makers make different — and better — decisions when they are being watched).

The second key development, while less positive, also contains within it an important strategic dimension. Last week, the Florida District Court issued a decision allowing the case against the individual responsibility clause of the ACA to go forward. Specifically, the Florida court will hear arguments about whether the individual responsibility requirement is legal under the Commerce Clause. The court also will hear arguments about whether the Medicaid expansion under the ACA exceeds Congress’ authority, although Judge Vinson’s decision makes it clear that he considers this argument to be much weaker than the individual responsibility claim. Because Judge Vinson rejected the federal government’s argument that the penalty for not having health insurance constitutes a tax, the focus of the Florida case is squarely on the Commerce Clause argument. Just a week earlier, a District Court in Michigan ruled that the individual responsibility requirement was Constitutional. Whether Florida (and Virginia) ultimately agree with the Michigan ruling, the issue is likely heading for the Supreme Court, which should be enough to give anyone concerned about the sustainability of the ACA a few sleepless nights (especially since the wife of one Justice is actively campaigning for repeal).

But while legal scholars slug it out and try to second guess the next round of rulings, it is important for advocates not to lose sight of the intertwining of the political and legal issues since most advocates will not be able to intervene directly in the legal proceeding.

First, the court cases keep public attention focused on the individual responsibility requirement, which is one of the least popular provisions of the law. The lawsuits also encourage doubt over whether the law will actually be implemented in its current form and potentially give cover for foot-dragging by state administrations inclined to oppose implementation.

The court actions not only affect the political debate, they are also affected by it. The political backdrop against which the Supreme Court makes its final decision is extremely important. To the extent that the law is considered unpopular and there is an active movement for roll back, it will create a context in which a negative legal outcome is considered more palatable.

The key takeaway for supporters of reform is that whether we are looking at how the court cases affect the political debate or how the political debate affects the courts, the response of advocates must be to keep working to create a context of support for the law and expectation that it should and will move forward.

Overall, the events of the past week underscore both the need for and the potential of sustained consumer engagement.

— Michael Miller, Policy Director

Tags: , , , , , , ,
Posted in Health Reform Insider, Uncategorized | No Comments »

Consumers Win on MLRs!

Thursday, October 21st, 2010

In the final showdown at the NAIC meeting, Insurance Commissioners listened to consumer advocates and took a firm stand on medical loss ratios (MLRs). After a furious week of lobbying by both the insurance industry and consumer advocates, the MLR definition passed without any amendments. This is a critical win that underscores the importance and influence of consumer advocacy on implementation decisions.

The amendments were filed on two issues — national aggregation (filed by Florida) and broker fees (by Ohio) — but were withdrawn after discussion among the Commissioners. An amendment on the most contested issue of late, credibility adjustments (also filed by Ohio), failed to pass by a vote of 34 to 19 (with one abstention).

The final vote to support the MLR definition was unanimous — thanks in large part to the hard work of consumer representatives on the NAIC and advocates around the country who supported them and reached out to their Commissioners on these issues.

Congratulations to all who worked to ensure this victory. It is a great example of how a concerted effort by consumers can have great impact! Next step: HHS approval!

– Christine Barber, Senior Policy Analyst

Tags: , , ,
Posted in Affordable Care Act implementation | No Comments »

MLRs — Going South?

Wednesday, October 20th, 2010

Our sources at the National Association of Insurance Commissioners (NAIC) meeting in sunny Orlando sent an update on the storm brewing over the medical loss ratio (MLR) definition. For those of you new to MLRs, it’s been a long seven months for all of the folks embroiled in the efforts by the NAIC to define what are medical expenses versus profits or administrative expenses. Up until now, the NAIC has carefully worked to adhere to federal law and balance the interests of industry and consumers. But in Florida, those calm skies are growing cloudier as the final vote nears tomorrow morning.

The insurance industry has been pulling out all the stops the past few weeks to undermine the carefully woven fabric of the MLR regulation crafted by the NAIC sub-committees. Their threat to Commissioners: We will pull out of your insurance market and leave your residents without any options – a low blow considering the industry agreed to the compromises made on these very issues just months ago.

Insurance Commissioners are mostly non-committal as they prepare to file amendments to the MLR tomorrow and then have another commissioner-only discussion. The whole definition is up for a vote on Thursday. What should be clear to all is that if the amendments pass, the entire MLR will be meaningless and consumers will not benefit from the potential changes.

First up is national aggregation: Some national insurers are seeking aggregation, or pooling all of their MLRs across state lines for certain insurance markets. This would mean that if an insurer is in a state with a low MLR and another state with a higher MLR – the two numbers would be averaged – leaving consumers in the dark about how much of their premium dollars are spent on health care. This change not only goes against the definition of health insurance ‘issuer’ in the federal law but could also end up making national carriers look better than their local competition.

Second are credibility adjustments for small insurers. Insurers must hit the MLR percentage the required by ACA (85% in large group and 80% in small group and individual markets), or provide rebates to policyholders. There has been much discussion at NAIC about how to protect smaller insurers that may not meet the MLR standard because they only cover 1,000 people and random events (like few filed claims) affect their MLR, rather than their spending on administration and profit.

Previously, everyone agreed to the solution to adjust the MLR of these small carriers – like a handicap in golf – called a credibility adjustment. This is done through actuarial calculations based on a “confidence level.” Basically, the confidence level is the amount of certainty that insurers tried to meet the MLR in good faith, but that random events prevent them from meeting the MLR target. The bottom line is that a higher confidence level means a much weaker MLR standard. The draft regulation crafted by NAIC workgroups allowed a 50 percent confidence level. The issue was heavily debated, and the actuaries agreed that 50 percent made the most sense mathematically and from a policy perspective.

However, there is now a last-minute push to move the confidence level up to 80 percent, and to expand its reach to insurers that cover up to 75,000 people. As an example of how this would play out, every health plan in New York would qualify for a credibility adjustment and would gain between 10 and 25 percentage points on their MLR without actually streamlining anything but maintaining the status quo. Insurers will have a much easier time meeting ACA’s target for MLR, without reducing administration and profit.

Third, counting broker fees in the MLR calculation. There is a move afoot to take broker commissions out of both the premium and the administrative expense component of the MLR. This could be damaging to consumers. Broker fees need to be counted toward administrative expenses and profits.

Right now the NAIC has an opportunity to do something transformative for consumers. Let’s give them the support they need to do so. The vote is tomorrow morning. Take five minutes and call your Insurance Commissioner today. See our latest alert for talking points and more information.

— Christine Barber, Senior Policy Analyst

Tags: , ,
Posted in Affordable Care Act implementation, private insurance | 3 Comments »

Cross-Post: Consumer Rep Previews the National Association of Insurance Commissioners National Meeting

Friday, October 15th, 2010

This blog was originally posted on Say Ahhhh! A Children’s Health Policy Blog.

Hard to believe it’s come around again but that National Associatin of Insurance Commissioners (NAIC) is gearing up for a big national meeting – this time in Orlando, Florida from October 18-21. I and my fellow consumer representatives will be packing our Mickey Mouse ears and fanning out at the big regulator-industry confab to share our views on how to make the Affordable Care Act implementation work for consumers and families. The NAIC has a lot of work packed into just a few days. Here’s a preview of what they’ll be doing and how it might impact children and families:

* Helping states implement the September 23 patient protections. NAIC’s “Regulatory Framework Task Force”, chaired by South Dakota’s Director of Insurance, Merle Scheiber, has been drafting model laws to help states implement many of the “Patients’ Bill of Rights” protections in the ACA, such as the prohibition on pre-existing condition exclusions for children under 19, required coverage for young adults up to age 26, preventive benefits, restrictions on annual limits and the ban on lifetime limits, internal and external appeals, and the prohibition on rescissions. The Task Force has almost completed its efforts, and is expected to take up final edits and changes during its meeting in Orlando on October 18. State advocates can expect that many states will use these models to craft the necessary legislation to enforce these new consumer protections. We’ll also be talking to the regulators about strategies to keep child-only plans in the market and make kids’ coverage more affordable.

* Developing an Exchange model law. The NAIC has created a new workgroup, co-chaired by Commissioner McRaith from Illinois and Commissioner Praeger from Kansas, to develop a model law for states to establish an insurance exchange. This group will be meeting on October 20th to review the draft model law and discuss possible recommendations to HHS on issues like governance, exchange functions, network adequacy, marketing standards and quality ratings. During their summer meeting in Seattle, the workgroup also agreed to create a high-level liaison group to state Medicaid directors, led by Commissioner Praeger. We’ll be eager to hear about that group’s efforts to date, particularly on how they intend to address the “no wrong door” goals of the ACA and coordination of care for low-income families that may be cycling between Medicaid and commercial insurance.

* Medical Loss Ratios. NAIC’s draft regulation to define the medical loss ratio (MLR) under the ACA was posted on October 5. It’s likely to be voted on by NAIC’s Excecutive Committee and Plenary during their final meeting in Orlando on October 21st. We’re expecting some fireworks as the insurance industry pushes back hard against some of the tougher requirements. In particular, insurance agents are asking that they be left out of the equation. The bottom line for families purchasing insurance: the MLR standard is a measure of how much a health plan devotes to actual medical care as opposed to overhead and profits. We’ll be urging the NAIC to stay strong against industry pressure to weaken the standard.

* Consumer Information. One of the most important yet least publicized consumer protections in the ACA is the requirement for more transparency in the information provided to consumers about health plan benefits, exclusions, premiums and cost-sharing. NAIC has been charged with developing the standardized definitions and summary of benefits form that all qualified health plans must provide to consumers making purchasing decisions. The NAIC’s Consumer Information workgroup, co-chaired by Superintendant Kofman from Maine and Commissioner Miller from Oregon, has been working diligently all summer on the summary form and is now awaiting the results of focus group testing. Once the focus group results are back, the group will meet in Orlando to finalize the summary of benefits form. HHS will likely then include it in a regulation expected in March of 2011. The consumer reps on this group are working hard to make sure that consumers get the information they need to make purchasing decisions that are right for their situation, without having to worry about hidden contract language that leaves them financially vulnerable when they need care.

The NAIC meetings are open to registered participants, but the travel, hotel and fees are a significant expense. Advocates for children and families are welcome to contact any of the NAIC’s consumer reps to ask questions or share any comments.

– Sabrina Corlette, Georgetown Health Policy Institute

Tags: , ,
Posted in private insurance | No Comments »

Insurance-palooza – the NAIC National Meeting in Seattle

Monday, August 23rd, 2010

The Summer 2010 Meeting of the National Association of Insurance Commissioners (NAIC) in Seattle Washington wrapped up last week. For those of us not lucky enough to spend a long summer weekend with a group of insurance commissioners, some friends of Community Catalyst provided the inside scoop on the meeting.

– Victory on Medical Loss Ratios. The Executive Committee of the NAIC approved the medical loss ratio recommendation made by the subcommittee on this issue. In spite of receiving a lot of pressure from insurers, brokers and other industries, the Commissioners stayed the course and remained respectful of NAIC process by voting yes on the recommendation, with very few changes.  Thanks to the consumer representatives on the NAIC, who have worked for months to ensure the MLR definition is based on actual medical costs and evidence-based quality improvement efforts. And, thanks to advocates to who called their Insurance Commissioners about this issue. This is good news – and we expect HHS to accept the NAIC’s recommendation.  What this means for advocates: This is a procedural win that is gets us closer to a tool to fight unwarranted premium increases and get consumers better value for their insurance dollars. It also demonstrates that we need to monitor these decisions and make our voices heard as necessary to ensure consumers are protected.

– Brokers feel the love. In a bizarre turn of events, the NAIC spent their summer weekend drafting an “ode to brokers.” The resolution, sponsored by a number of Insurance Commissioners, expressed support for the work that brokers do for the insurance market.  A clause in this resolution suggests that brokers should be favored as Navigators, the entities that will help to explain and enroll people in coverage and plans through the Exchange starting in 2014. This is inconsistent with the intent of the ACA, which clearly lists potential Navigators as “trade, industry, and professional associations, commercial fishing industry organizations, ranching and farming organizations, community and consumer-focused non-profit groups, chambers of commerce, unions, small business development centers, other licensed insurance agents and brokers, and other entities.” (Section 1311(i)). It is unclear what weight this NAIC resolution holds.  But one thing is certain: brokers were flexing their muscles in Seattle, and many Commissioners were impressed. What this means for advocates: We need to educate Insurance Commissioners and others in state government about the importance of community-based groups in providing public education, health plan information, and enrollment assistance, other critical roles of Navigators.

– Everyone’s thinking about Exchanges. NAIC created a tentative workplan for the subgroup charged with working on Exchanges. They are dividing into 14 smaller workgroups (leads should be posted on the NAIC website soon).  But we hear that one of the subgroups will work on a “skeleton” model law for states, which will basically track the statutory requirements and no more. Other subgroups are likely to respond to HHS’s request for recommendations on (1) network adequacy, (2) marketing standards and (3) quality measures.  Another group will tackle “principles and priorities” on a number of other big exchange topics such as governance and operations. (TBD). Another high-level liaison group will work with state Medicaid heads on plans for collaboration. What this means for advocates: The NAIC may have helpful resources as states begin to design Exchanges.  More to come.

– Lastly, though not specific to NAIC, rate review grant announcements were also made last week. A number of Insurance Commissioners talked about using the funds to increase consumer involvement in the process and get more information out to public. What this means for advocates: If your state applied for and received a grant to increase rate review, now is the time to work with your Commissioner on a plan to increase consumer involvement in the premium oversight process.

– Christine Barber, Senior Policy Analyst

Tags: , , ,
Posted in affordability, national health reform | No Comments »

The Insider: Trench Warfare

Thursday, May 13th, 2010

While political and legal attempts to repeal the Patient Protection and Affordable Care Act may draw the most attention, the real success or failure of the law will play out in hundreds of regulatory battles that will take place largely out of the public eye.

One of the first such battles is the definition of “medical loss ratio” (MLR).  The MLR is the percentage of premium dollars that a health insurer is required to devote to the medical care of its enrollees.  Under PPACA, individual and small group plans must spend 80 percent of premium dollars on medical care (as opposed to advertising, administration and profit), and larger groups must spend at least 85 percent. Failure to meet these required thresholds would trigger a rebate to policy-holders.   However, PPACA allows expenditures designed to improve quality of care and state and federal taxes to be exempted from the MLR calculation.

Industry representatives are not satisfied with these qualifiers, and are lobbying for special transition rules for those carriers that will have trouble meeting the MLR standard, warning that insurers may choose to exit the market rather than pay rebates.  Some are also arguing for special laxer rules for small carriers or for certain types of insurance.  They claim that small carriers have higher administrative costs but lower premiums for comparable coverage, and could be driven from the market without special consideration.

If it is indeed the case that small carriers have lower premiums (despite higher administrative costs), it is likely because these small insurers are underwriting more aggressively—a practice they will be forced to discontinue in 2014.  There doesn’t seem to be any good reason now to allow them to keep cherry-picking healthy enrollees who they will then be able to hang onto in “grandfathered plans” once reform fully kicks in—making the risk pool worse in the Exchanges.

The National Association of Insurance Commissioners (NAIC) is charged with developing recommendations to HHS to implement the MLR provision.  NAIC recommendations are expected by June 1.  The extent to which the NAIC (and ultimately HHS) gives in to the special pleadings of the industry will be one early indication of the willingness of state and federal regulators to stand up to special interests as implementation proceeds.

–Michael Miller, director of strategic policy

Tags: , , , ,
Posted in Health Reform Insider, national health reform | No Comments »

The Insider: Repeal vs. reality, PLUS the health reform deciders

Monday, April 5th, 2010

Are the worms turning?
While cries of repeal are still echoing in some quarters, doubt about the enterprise is beginning to seep through. Senator Bob Corker (R-TN) has publicly argued that repeal is not realistic (later clarifying he meant as long as Obama is in office), and the Chamber of Commerce, one of the interest groups most active in opposing reform, has also said it will turn its attention from repeal to influencing the regulations and pushing amendments. The Chamber is also planning to spend tens of millions of dollars to elect candidates friendly to their positions (which generally means not those who voted for health reform), but there’s little doubt that they would do that with or without passage.

More about the walk backs here and here and here.

Essentially, repeal is a nonstarter unless Republicans control both the White House and 60 Senate seats (or are close enough to 60 to make a deal with conservative Democrats). Threatening to “defund health care reform” if they take control of Congress is similarly hollow (Wonk Room says why.)

As we said last week, repeal isn’t in the interest of most of the health care industry (they’re helping to back Enroll America) or that of the employers (who doth protest too much.) Repeal is, at bottom, the rallying cry of  ideological extremists and their financial backers who oppose a set of policies embraced by many Republicans in the 1990s at Mitt Romney just a few years back-–policies well to the right of Richard Nixon. (For the record, it gave me the CREEPS to write that.)

Although the repeal caucus is becoming more marginal, the walk back from repeal doesn’t in any way mean smooth sailing for reform. (Speaking of sailing, watch our video valentine to health reform advocates.) Along with the Chamber, insurers are suiting up for the implementation game. The industry sent over 1,500 representatives to a recent meeting of the National Association of Insurance Commissioners (who number 50). The NAIC will have a major role in structuring the Exchange and the law’s insurance reform provisions.

And big employers are already squawking about the fact that the law closes a loophole in the Medicare Part D statute that allowed them previously to deduct from their taxable earnings the portion of retiree health benefits cost subsidized by the federal government.

This is the brave new world of our next four years: powerful special interests focusing their fire on specific provisions that they find objectionable, while repeal remains “red meat” to rile up the far-right voters. Better get used to it and dig in for a long fight.

A closer look at public opinion post-reform: Is there a bump from this Baby?
(Maybe, but it’s not really showing yet.)

On his recent trip to Maine, President Obama chided the media for their obsessive focus on the popularity of health reform, saying the new law must be given time to work.

But, if anything, the importance of public opinion is growing post-passage. During the legislative cycle that just finished, public opinion mattered, but was only one among many factors that influenced the outcome. The real decision makers were Congressmembers, who are influenced not only by voters, but by donors, advisors, party leaders and other folks who want stuff.

In the election (spin) cycle we are entering, voters are the decision makers. And what they think about health reform in 2010 and 2012 will, in part, determine who is in a position to make the key decisions about implementation. Right now, voters are pretty evenly split on the question of whether passage was a good thing for the country. On balance, they believe that reform will help someone other than themselves and are worried that that help will come at their expense.

The public also holds internally inconsistent views about the role of government in health care, with majorities simultaneously believing that there is too much government involvement in health care, that health care reform didn’t do enough to check the power and potential abuses of insurers, and that there should be a public insurance option available.

One factor in public opinion that could have big mid-term consequences is the age divide. The majority of younger voters support reform, but older voters, who tend to be a relatively larger fraction of the mid-term electorate, are more negative on reform.    And while younger voters are more likely to care about other things (e.g. unemployment), health care is a more pressing issue for older voters.

These older voters’ critical role in midterms helps explain why one of the first things out of the box is help for seniors facing high prescription drug costs. Starting this year, Medicare beneficiaries who enter the “doughnut hole” coverage gap in Medicare Part D will receive a $250 rebate—giving seniors a tangible benefit to weigh against the fear of future change that has been stoked by opponents throughout the debate. (Remember the death panels?)

Although it is still a long way from election day, right now it looks likely that Republicans will make big gains in the midterms in both houses, though still fall short of wresting control of either chamber away from the Democrats. With narrower margins to work with at best, we can expect future [positive] tweaks to reform to come via the budget reconciliation process.

Deconstructing the kids pre-existing condition brouhaha
In the run up to reform, Democrats touted the elimination of pre-existing condition exclusions for children as one of immediate benefits of reform. Then, shortly after passage, there was a brief argument about what the provision actually meant: Did it mean that insurers could no longer refuse to cover a family based on a child’s pre-existing condition? Or did it only mean that if they covered a child, they could not impose an exclusion? (Prior to passage, there was quiet concern about the ambiguity of the provision, but it did not reach the media). After a stern letter from HHS Secretary Sebelius, insurers—who had briefly asserted the more narrow interpretation—quickly folded their tents and agreed to the more expansive view.

Why? Was the law clearly on the side of the administration, or was something else at play? (If you guessed the latter, give yourself a star.)

First, staging a fight to defend their right to deny coverage to sick kids is a bad PR move for the insurers. Second, insurers don’t really oppose reform overall (Enroll America, remember?)

Third, and most importantly, insurers retain the ability until 2014 to vary premiums based on the “experience,” or expected cost, of enrollees with significant illnesses. Until then, the immediate win for kids with pre-existing conditions is less meaningful than it first appears. So score it as a PR win for the administration and insurers, and a small step forward for children with pre-existing conditions.

No Fooling
Has Senator Tom Coburn (R-OK)been spending too much time with Congresswoman Michelle Bachman (R-MN)? Last week, Sen. Coburn admitted to being paranoid. “This may be a little paranoid, but I think they know it’s going to fail,” Coburn said. “Then we’ll go to a single payer system like Western Europe.”

(Upon hearing Coburn’s comments, Dennis Kucinich is rumored to have said, “From his mouth to God’s ear.”)

–Michael Miller, director of strategic policy

Tags: , , , , , ,
Posted in Health Reform Insider, national health reform, prescription drugs | No Comments »