Anyone who thought the fight was over with the signing of the Affordable Care Act was sorely mistaken. And no, I’m not talking about Republicans efforts to repeal the law or challenge its constitutionality. I’m talking about the writing of regulations that will implement the law.
Some 10-20 pages – or more – of regulations are now being written for every page of the ACA. The law itself is vague in many respects, meaning Health and Human Services bureaucrats writing these regulations will have the final say on exactly what the law means in practice. This means special interest groups – like insurers – are still applying massive amounts of pressure on HHS, arguing for the weakest regulations possible under the law.
Earlier this morning, in the face of an intense last-minute lobbying effort, state insurance commissioners approved a set of regulations that will keep a very tight reign on insurance practices. The approval was a victory for consumer advocates who worried insurers might be able to persuade state commissioners to get behind weaker rules. The regulations, which dictate what expenses insurers can classify as “administrative,” have far reaching implications and could be wholly adopted by HHS, which asked the commissioners to “recommend” the regulatory language.
At issue is what’s known as “medical loss ratio” (MLR), the percentage of premium dollars insurers must spend on medical care. The ACA says insurers selling plans in the large group market – i.e. large employee plans – must spend 85% of premiums on medical care; the figure is 80% in the individual and small group markets.
But exactly how this percentage is calculated was the subject of intense debate since the ACA was signed by President Obama. This sounds arcane, but it’s one of the most crucial regulatory elements of the ACA. Insurers wanted to calculate their MLRs nationally, meaning they could aggregate their administrative and medical care expenses across all states in which they operate. The National Association of Insurance Commissioners (NAIC) said No – insurers must calculate MLRs for each state, a much stronger regulation. (One health policy expert I talked to said it’s the difference between knowing the gas mileage for the entire Honda fleet and knowing the gas mileage for a Honda Civic. The former isn’t very helpful when you’re shopping for a new car.) Insurance agents and brokers wanted their commissions excluded from the MLR calculation altogether – the NAIC said No, commissioners are administrative expenses and belong in the ratio.
The NAIC meeting where the MLR vote took place was held at a hotel in Orlando, Fla. I’m told before the meeting insurance company CEOs were busy working the phones, personally calling state insurance commissioners and practically begging them to weaken the MLR guidelines already approved by an NAIC committee. At the meeting itself, I’m told there was one insurance company employee or lobbyist on hand for every insurance commissioner or staff member.
This lobbying effort will continue for years, as HHS gradually moves through the process of writing regulations to put the ACA into practice.