New rules go into effect in January:
The MLR goes into effect in January 2011. The law requires that large-group plans spend 85 percent of premiums on clinical services and activities related to quality of care. Only 15 percent can go to other items, such as administrative costs, advertising and profits.
For small-group and individual plans, the ratio is 80 percent premiums and 20 percent other costs. If insurers fall short of the standards in 2011, they’ll have to issue rebates for that amount in 2012.
Maine has asked for an exemption, but only on the small-group and individual plans.
Days before a key and controversial provision of the health-care law is set to take effect, Maine is the only state to have asked the Obama administration for an exemption
Consumer advocates have hailed the new “medical loss ratio” standard as a ground-breaking protection against profiteering by insurers. But the law’s drafters were concerned that it could prove too onerous for plans selling to individuals, whose customer base is less stable and healthy than those of plans serving small and large businesses. So the law permits states to request temporary adjustments of the standard from the Secretary of Health and Human Services.
Until then, Maine has requested that the medical loss ratio required of its individual market plans be lowered to 65 percent. State officials have also asked that the ratio be calculated using the state’s own, potentially more expansive, definition of activities that can be counted as improving customers’ health.
Maine says that companies that sell small-group and individual policies can’t meet the new MLR rule (80% to medical care and 20% to administrative costs), but I’m wondering if this is about protecting commissions to insurance brokers who sell those small-group and individual policies, rather than any concerns about “onerous” regulation:
The law hits brokers on two fronts: First, it sets up online health insurance marketplaces called exchanges. Beginning in 2014, customers in the individual and small group markets will be able to compare and contrast health plans, which will be regulated by government, without the help of a broker.
Second, starting next year, insurers are required to spend at least 80 percent of their premium dollars on direct medical care. To save money, many are considering cutting or eliminating the commissions they pay brokers, which are considered an administrative expense. Some insurers have already started reducing broker fees.
Insurance brokers lobbied heavily to have their commissions excluded from “administrative” cost calculations during the federal rule-writing process, and failed. Maybe they found a sympathetic ear in Maine?
WereBear
We were put on this earth for Profit!
That is what God wants.
Kay
@WereBear:
You’d think Maine wouldn’t like to be out there all alone with this. Mississippi rejected a waiver, because the insurance commissioner was concerned insurance companies would “take advantage”.
If you’re out there past Mississippi, you’re way the hell out there. Racing to the bottom, in Maine.
mk3872
I wonder if the “public option or DEATH” crowd understand or even know about these other provisions in the HCR law?
Or did they spend all of their time (along with the MSM) dramatizing the Congressional process and did their single-issue advocacy lead them to completely look past these sorts of provisions?
Kay
@mk3872:
Well, in their defense (and I don’t know if he’s a ‘public option or DEATH’ person) Wendell Potter was on the board that set the MLR ratio rules, representing consumers. It was hotly contested. A big ‘ol fight.
He did a good job. He got a lot of concessions. He didn’t get everything he wanted, but he was in the fray there.
Rhoda
Wow. I did not know about this. So in 2012, all these folks will be getting refunds from their insurance companies thanks to this law or they’ll see their rates lower or better coverage in ’11; all before we even have many of the major reforms like the exchanges running.
That’s gonna make it hard on all those Republicans running against health care reform when tangible benefits like this start rolling in.
WereBear
@Kay: Maine always has been the Mississippi of the NorthEast. They should aspire for better, but then Mississippi doesn’t either.
I swear, some of the most frightening things in Stephen King’s early novels weren’t the vampires.
Gin & Tonic
Independent insurance brokers have always had outsized influence in state legislatures.
daveNYC
OK, so maybe it’s just me, but how exactly do the individual and small group categories count as entirely seperate risk groups? Unless the insurance company only sells to individuals or whatever, aren’t they still effectively pooling the risk of all their customers into one big group?
That’s the big saving grace of most of his novels, he would go through the effort of writing two or three pages of background for a character that would get offed within five minutes of appearing in the novel. I’m especially thinking of the fireman in The Tommyknockers.
JMC in the ATL
Interesting. I hadn’t heard about this through the regulator grapevine, so I don’t know what prompted it. 65% seems ludicrously low to me, though. Most insurers already run around an 80 – 85% loss ratio, at least the majority of the ones I have seen.
guster
@mk3872: I wouldn’t call myself ‘public option or death,’ because I think the public option is fairly weak (oh, if only some other first world countries has systems where a single, hm, offerer of payment was the norm–I wonder how that’d work.), but while I supported HCR as a bandaid on a bleeder (which is better than no bandaid), the new MLR rules don’t help much.
I support them because they’re a step in the right direction, but I still can’t afford health care for my family. Maybe that makes me a wild-eyed single-issue guy. Hopefully we can scratch by until 2014, when things will go from impossible to merely tremendously burdensome.
Superluminar
OT but if you have the stomach for it read the comments on this thread for some epic glibetarian wanking. The last comment is the best…
Superluminar
Oh fucking blockquote fail FYWPWAVRP. Anyway there’s now a new comment!
I too find it amusing…
Omnes Omnibus
@Superluminar: I followed your link. You, sir or madam, now owe me for the two minutes of my life that were wasted. Since my life is priceless, you may now send me nothing.
Superluminar
@O^2
oh you’re just getting your hate on like in 1984. Happy new year to you too (almost) ;-)
ETA and it’s Sir, except on weekends…
Omnes Omnibus
@Superluminar: It did take two minutes. HNYTY as well.
Edited due to acronym fail.
Suck It Up!
@daveNYC:
that book was damn scary. Had to put it down regularly as if I was watching it on the movie screen.
the real movie of it sucked though.
Superluminar
@O^2
well i’m trully sorry about those two minutes, but then it’s absurd to expect me to know about every subject under the sun. Anyway, at least I’m not personally abrasive. That would be bad.
Omnes Omnibus
@Superluminar: Yes, you don’t appear to say fuck a lot. That would truly be bad.
kdaug
@Suck It Up!: Very few of Kings books have ever been made into good movies.
Interestingly, though, from the four short stories in “Different Seasons”, three have been made into decent or great movies: Apt Pupil, Stand By Me (org. “The Body”), and Shawshank Redemption (org. “Rita Hayworth and the Shawshank Redemption”).
Superluminar
@O^2
well I like to fuck a lot, but i find that occurs more frequently if i’m not quite so forthright about it…
I should really apologise for hijacking this thread, but +5 already so fuck it.
boatboy_srq
One of Maine’s problems – and I suspect the driving force behind the waiver request – is employment. Maine hasn’t had a particularly healthy job market for generations, and one of the few surviving major employers in the state is Unum. Unum is a large health insurer, and has a substantial presence there.
I suspect Unum made noises in Augusta about relocating their business – and laying off their staff there – if Maine remained “unfriendly to the healthcare industry” by signing on unreservedly to the healthcare plan. In a state whose economy is otherwise so damaged, losing an employer of that size would be enough to make the legislature reconsider. Unum has already been bought out, and its headquarters relocated from Portland to Chattanooga, so additional threats to the employee base would carry substantial weight.
It’s hardly a good excuse to sidestep good public policy, but under the circumstances at least it’s comprehensible.
kay
@boatboy_srq:
It’s a very bad move, though, because the tax credit for small business to provide health insurance for employees is having a positive effect:
Right as that was happening, Maine decided to exempt small-group insurers from an 80/20 rule?
I don’t know: it just seems crazy. Why make a concession now? The insurers are picking up premium-payers. Wouldn’t that offset any loss on an 80/20 rule change?
SenyorDave
I worked in insurance, although it was property & casualty, where claims settlement expenses are much higher as a percentage of the premium dollar. Even then, most lines of business had higher than 65% loss ratios, except for ones where there were extenuating circumstances.
boatboy_srq
@kay: Of course it’s a bad move. You’re quite right that the insurers will be picking up enough additional subscribers to meet the need.
The problem is Maine’s history. Textile mills, that drove much of the state’s economy, closed when the millers took their business South (to the Carolinas, mostly, before offshoring production completely). Timber has never been a real breadwinner for the state. Agriculture, though still excellent, has been overshadowed by poor marketing there and excellent marketing elsewhere (what states, for example, come to mind when I say “apple” or “potato”? Chances are Maine isn’t one of them.). Fishing has been in a bad place for some time, and little of the processing for that is done locally any more. Shipbuilding has been hard hit, and BIW in particular has had a hard time with more shipbuilding going to Louisiana and other cheaper (mostly Southern) states. There was a brief high-tech boom in the 80s, but that failed when Pease AFB (in Dover, N.H.), closed and Portsmouth Naval Shipyard (in Kittery, ME) got scaled back (Brunswick NAS, the last facility, is due to close next year), and most of the technical innovation returned to Silicon Valley.
There is a long and painful history of business that grew the state packing up and heading South for presumably cheaper markets. So when an employer like Unum says “be nice to us, or we’ll take our business to our already existing facility down South and bump your unemployment up a full percentage point,” chances are the legislature will listen, because they’ve had a bellyful of that pattern over the last half century and because they can’t afford more unemployed.
I agree, it’s nutty to oppose sound public policy, particularly when the policy is win-win as is this one. But it’s also hard for a state to comply if not doing so is beneficial, even when helping your own state’s residents is harmful to the nation.
The Grand Panjandrum
Let’s not forget that Maine had a marriage equality law on the books and the people of Maine, through the initiative process were able to override both the state legislature and the governor’s signature to repeal that law. Maine is a beautiful place to visit but I wouldn’t choose it as my place to reside with NH and VT close by and more progressive on most social issues. ( Yes, even NH!)
Jennie
Full disclosure up front: I work for an insurance carrier (although not healthcare) in Maine in IT where a goodly chunk of my job is to pull together financials from various systems (premium, billing, claims, GL, …) both for regular reporting and for various auditors.
That said, Maine may be in a better situation than most states to understand the impact of the 20% cutoff (I’m glad they established the need for metrics up front and MLR is probably as good as any) and it’s potential impact as it relates to the actual delivery of insurance products based on its experience with the Dirigo Health program. Via Dirigo, Maine has actually been providing healthcare insurance to small businesses and individuals who’ve been squeezed out of the traditional market over the past several years and it’s been tough to do.
gypsy howell
@Rhoda:
Call me a cynic, but I’d be willing to bet one month’s insurance payment (currently $1575 — a hike of 17% over last year’s premium despite losing one dependent — and undoubtably at least the same % higher next year) that this will never never never ever happen, Rhoda.
I’m sure there are loopholes in this rule that you could drive a truck through.
Not gonna happen. Ever.
Lower rates. It’s to laugh!
Refunds? Snort.
joe from Lowell
Misery was made into a very good, very scary movie.
Cathy Bates was fantastic in that film.
JITC
I am in favor of this provision. It’s ridiculous that Medicare can run at a single digit medical loss ratio while the rest of us are forced to deal with private insurers with huge MLRs.
BUT since the ACA did NOT cap premiums or premium increases, the insurers are simply raising premiums to make up for lost profits as a result of this. Just yesterday I received letters from my insurer telling me about a $37 monthly increase in my premium, a $79 increase in my husband’s, and a $24 increase in my three-year-old daughter’s (!). The reasons listed on the form letters are:
“* Advances in medical technology and subsequent increases in utilization
* Price inflation for medical services that exceeds inflation in other sectors of the economy
* Cost-shifting from people who are uninsured and those receiving Medicare and Medicaid to the private sector
* Compliance with government regulations, including the recently enacted health care reform legislation
* Lifestyles, such as physical inactivity and increases in obesity”
Seriously. BTW this is the THIRD monthly premium increase we’ve all received in the last year and a half.
All of their reasons for increasing my premiums, without increasing my benefits, are perfect arguments for single payer health insurance.
MattR
@Superluminar: That post and the comments are pretty amazing. Lemme try and translate the one that you quoted. I believe it means: “So what if Megan is constantly wrong about details and doubles down when confronted instead of correcting her mistakes? She agrees with my worldview so none of those things matter”
@JITC:
I am not sure how this would work if they have to spend 80-85% of those new premiums on providing actual care. What am I overlooking?
Rhoda
@gypsy howell: Okay. I don’t have that kinda cash to spare; but I’ll bet a pie. I can bake and FedEx a nice apple pie. I don’t mind losing that much.
If you can’t bake, I like Sara Lee.
JITC
@MattR:
Let’s say I used to pay $1.00/month to my insurer. They used to keep $.30 for overhead/profits/private planes/etc. and spend $.70 on my health coverage.
Now this new law requires them to keep only $.20 and spend $.80 on my coverage. But they really liked getting $.30. So they have to increase my monthly premium to $1.50 to keep their revenue from me the same.
There is nothing in the new law that prevents them from implementing such an increase.
Do I now get $1.20 in actual care? In theory yes, but only if I utilize it. But in reality, it’s all pooled.
So SOME people do get more care, but others just pay more into the system. They have to provide 80-85% care across all their customers, not on each customer. So, premiums go up for all customers, many benefit (hopefully the sickest) but premiums definitely go up for all.
BTW, despite all this, my insurer denied an PET scan ordered by my oncologist this month.
P.S. sorry for the weird formatting in my previous post. the block-quote function didn’t work well and i couldn’t fix it.
Mnemosyne
@JITC:
You may be able to report your insurer to the Dept. of Health & Human Services — companies that raise their premiums arbitrarily can be barred from joining the exchanges.
MattR
@JITC: Thx. Makes sense. And I guess one other thing they could do is raise the payments to your doctor from 70 cents to $1.20. They would still get their 30 cent profit and they would not even have to authorize new services or provide any coverage that they did not previously provide. In fact I will bet there will be at least one case where the company does this with some sort of kickback from the doctor back to company (or someone in it)
Barb (formerly Gex)
Yup. And Wall Street pays capital gains taxes on bonuses not income. And eventually a huge amount of the costs of finance went to bonuses. This is a recipe to have all the rent-seeking in the current system get shifted to “commissions”. What is the objection to mandating that only a certain percentage of what people pay for health care go to anything but?
JITC
@Mnemosyne:
I’m not sure they are breaking the law. And it’s Anthem. You probably recall that they got in trouble last year for that arbitrary 35% raise on so many California premiums right before the big vote on the ACA. However, they had sent us our increase letters BEFORE those letters went out so we weren’t included in the redress the state of CA demanded for that increase. Then we got another one later in the year, and now this one.
What really gets me is that one of their excuses for the increases is “Cost-shifting from people who are uninsured and those receiving Medicare and Medicaid to the private sector.” This is something Republicans created and fight to preserve. This is something the private insurers want! And yet, it’s also a reason why they have to increase the premiums on their long-term customers. Fantastic.
Just renews my commitment to single payer in CA (and SB-810 specifically).
mclaren
This illustrates how Obama’s HCR non-reform bill has actually made things worse. Premiums will continue to skyrocket because the underlying medical costs are zooming upwards at a fantastic rate due to the collusion and corruption and bribery and sweetheart contracts of the underlying medical service providers. Medical devicemakers continue to bribe hospitals to use their wildly overpriced devices, doctors continue to take bribes from big pharma to prescribe their grotesquely overpriced medicines, hospitals continue to sign lock-in contracts with nondisclosure price agreements with the buddy-buddy doctor-owned medical devicemakers and the doctor-owned overpriced imaging clinics and the doctor-owned overpriced blood work labs, so prices of all the underlying medical services and medical devices keep rising and rising and rising and rising and rising infinitely, without end, forever. The prices of routine surgeries and simple 40-cent plastic disposable surgical instruments that sell to hospitals for $1200 keep doubling and doubling again and then doubling again and then doubling again.
How do we know Obama’s HCR non-reform bill won’t improve things, but will only make things worse? Because the Massachusetts state health care plan, which closely resembles the recent HCR non-reform bill, is already in bad trouble.
Source: “Lessons From the Massachusetts Health Care Experiment,” Los Angeles Times, 17 October 2009.
Source: “Massachusetts Shows Federal Reform Headed For Trouble,” Kaiser Health News, 22 July 2010.
(Ordinarily I would place little credence in Kaiser Health News since they’re paid shills, but in this particular case their claims are supported by enough independent reputable news organizations to be believable.)
Source: “Massachusetts Health Care Woes Could Cast Cloud Over Romney Bid,” Fox News, 20 July 2009.
This is completely predictable. And, in fact, people like me have been predicting this for some time now.
It’s simple common sense. When you force everyone to buy private health insurance by law but you do nothing to control the corrupt price-fixing cartels of devicemakers and doctors and hospitals that force prices upward, obviously you worsen health care unaffordability because you create a captive market for the rapacious greedy corrupt collusive devicemakers and doctors and imaging clinics and medical labs and hospitals.
Obama’s HCR non-reform represents the worst of both worlds: prices rise faster because of the gigantic new captive market of people forced to purchase private insurance, while the states go broke and have to cut even more people from their insurance programs. So prices go up even faster and even more people wind up losing their insurance. Only this time, instead of people getting dumped off insurance by the health insurance cartels to boost profits, people are getting dumped off insurance by states desperate to stem the rising tide of red ink in their bankrupt insurance programs.
States slashing medicare while health insurance premiums (which people are now forced to buy) skyrocket…Obama’s HCR non-reform took a bad situation and made it worse.
As for the laughable assertion that individuals can report insurance companies to the government for raising premiums too much and that the government will penalize the insurers by not letting them join the exchanges…this is ludicrous. For-profit health insurers don’t want to join the exchanges. The exchanges are a dumping ground for chronically sick people who can’t get insurance in any other way, so for-profit health insurers want to stay far far away from the exchanges.
The hidden public-private cartel that sets health care prices hasn’t gone away because of Obama’s HCR non-reform — it’s only gotten bigger and greedier and more powerful because of all the new customers forced to buy unaffordable private health insurance. So now health care costs are rising even faster than they were before this so-called “reform,” and everything is getting worse at an accelerating rate.
Massachusetts is now talking about cutting back on necessary medical procedures and letting insured residents die because the state doesn’t have the money to pay for the infinitely rising health care costs created by a captive market of people forced to buy health insurance regardless of price. This is where Obama’s disastrously failed HCR bill has led us. Costs go up even faster and now people will be thrown out on the street to die when they get sick even after they’ve paid their health insurance premiums.
Clearly, Obama has played the same role for health care in America that Bush II played for the U.S. military: both of these people vastly accelerated the decline and degeneration when they got into office and started changing things.
This means that the onrushing collapse of the U.S. medical-industrial complex due to out-of-control costs has been accelerated by the recent HCR non-reform bill. Bad news. Very bad news for everyone.
Cue Kay to spew her usual lies about how wonderful the HCR non-reform bill is in…3…2…1…
mclaren
@MattR:
You’re overlooking three things:
[1] The HCR non-reform bill does nothing to control underlying costs so health care premiums will continue to double and double again and then double again as the costs of medical devices and surgeries and MRI scans and blood tests skyrockets without limits. To give you an idea of how completely out of control America’s underlying health care costs are, in France a routine doctor’s visit costs $20. In America it costs $90. In Germany a CAT scan costs $150 while in America, the exact same CAT scan with the exact same machine costs $950. In the Netherlands an aspirin in a hospital costs two cents, while in some California hospitals, an aspirin gets billed out at $5. This is nothing but pure greed by medical devicemakers and doctors and hospitals and big pharma and the HCR non-reform bill does nothing to change that.
[2] Insurers will increase deductibles — in fact, they already are, and have been for some time. Health insurers now offer “wonderful bargain” health insurance with per-year deductibles as high as $40,000…and the deductibles keep increasing. That’s so high as to be worthless. If you have to pay $40,000 or $60,000 or $80,000 before your insurance starts to cover costs, the insurance is worthless. And of course that’s the entire point. For-profit health insurers have an incentive to make their insurance as worthless as useless as possible, so that’s exactly what they’re doing, and what they’re going to continue to do.
[3] Massachusetts is already curtailing medical services and letting sick people die because the costs are rising so fast that the state is running out of money. This is the future of the HCR non-reform bill because all the underlying dynamics are exactly the same as in the Massachusetts plan. As costs rise, the available fixed pool of medical services gets increasingly overtaxed, so fewer and fewer people will be able to get health care due to government-mandated “curtailing of medical services.” This is obvious and inevitable when you fail to control costs but increase the pool of people who have access to services. The services must be cut, obviously.
Source: “American Health Care: The Disquieting Truth,” Dr. Arnold Relman, The New York Review Of Books, 30 September 2010.
AAA Bonds
Smart Americans read this site every couple weeks. It will cheerfully explain to you how you are about to be fucked.
It’s like reading Fox News: if your stomach’s too weak for it, get started on fixing that, and then, read it every day. The only way to know what’s going on in the world is to know what people THINK is going on in the world.
Kristine
@kdaug: Short stories, especially novellas, are an ideal length for translation to movies. Novels are too long, and often much of the meat needs to be trimmed to fit the bones of the story into the time allowed.