Health law's medical loss ratios, exchanges scrutinized

The National Association of Insurance Commissioners, which is working with the Department of Health and Human Services on implementing key parts of the health law, is still considering how to determine the kinds of insurers' expenses that are considered medical care.

The Hill's Healthwatch blog: Brian Webb, of the NAIC, said commissioners are still debating three topics -- If insurers should be able to aggregate their ratios nationwide or state by state; how taxes from premiums should be handled; and how to avoid penalizing plans for fluctuations in revenues. "The draft is expected to be adopted as is on Monday by an NAIC panel, but it could change before the whole body votes on it in mid-October. The health reform law mandates that health plans spend at least 80 percent of premiums on care (85 percent in the large-group market) or pay rebates to customers. The NAIC is tasked with writing the regulation, to be certified by Health and Human Services Secretary Kathleen Sebelius" (Pecquet, 9/28).

Marketplace/American Public Media: "The intent of the rule is to make sure most of the money paid for health insurance is spent on health care. Not advertising, not salespeople, not CEO salaries, not profits. … The biggest question: What exactly qualifies as a health care expense? Insurers and their lobbyists want as broad an interpretation as possible. Consumer advocates are on the other side.  … But under the [NAIC] proposal, insurers can't count things like fighting fraud as a health care expense. Marketing doesn't count, either. So, it might be harder for insurers to count brochures that promote wellness, for instance, as care" (Marshall Genzer, 9/28).

In the meantime, Bloomberg reports that health insurance exchanges are opening a new market for Internet-based vendors. "The federal government is preparing to award states up to $1 million each next month to study setting up the exchanges. The health legislation requires they be operating by 2014. States can run the sites themselves under the law signed by President Barack Obama in March, or leave the task to the U.S. government. EHealth, which reported $134 million in revenue from its insurance-shopping business last year, already has gained from the law, winning a $19 million U.S. contract to help build and operate a federal website where users can review state-by-state insurance options. … The Congressional Budget Office estimates 24 million Americans will buy coverage through the exchanges." Only Massachusetts and Utah have statewide exchanges already in place (Edney, 9/29).

The Associated Press: In other insurance news, Regence BlueShield of Washington state said Tuesday that it will stop selling kids-only insurance plans at the end of this week. "The move comes less than a week after several provisions of the federal health care overhaul went into effect, including one that prevents insurance companies from excluding children with potentially costly pre-existing conditions. Regence BlueShield is the first plan to stop selling child-only individual plans in Washington state, effective Friday. Several health insurers, including UnitedHealth Group Inc., Aetna Inc. and Humana Inc., already said they would stop selling new child-only individual insurance policies in other states, although those children can still get coverage through a family plan in the individual market." Many insurers are saying the health law is particularly onerous to them continuing to offer child-only plans (La Corte, 9/28).

The Associated Press/Bloomberg Businessweek: Health and Human Services Secretary Kathleen Sebelius said Monday in Nevada that "that animosity toward health care reform will continue to wane as insured and uninsured Americans learn more about the sweeping legislation that was signed into law in March." In addition, she said the law will "foster a competitive market that forces companies to provide affordable and thorough coverage or lose customers" (Silva, 9/28).

Finally, MarketWatch answers seven questions about the health law, including questions about preventive care, "grandfathered" health plans and costs of health plans once reforms are enacted. "A recent survey of large employers from the National Business Group on Health suggested the new rules related to health reform will add about 1% to the cost growth projected for their 2011 health plans. Many employers are scouring their plan designs for ways around cost problems" (Gerencher, 9/28).