The Affordable Care Act and HHS Oversight of Unreasonable Health Insurance Rates: Is It Good Versus Evil?

Check out this New England Journal July 21 "Truth and Consequences" article that reviews the Affordable Care Act's (ACA) language on the Fed's new oversight of "unreasonable" health insurance premiums. Regrettably, it portrays the folks at Health and Human Services (HHS) as the White Knights come to rescue America from the Black Empire of the Health Insurance Companies. Think of the derring do of a ray-gun toting Princess Leia versus a sociopathic Darth Vader. The good news is that because you read the Disease Management Care Blog, even the Journal's one dimensional storyline can be turned into a short efficient learning opportunity.

If you go online to the ACA and look at Section 1003, you'll see that the HHS Secretary is supposed to establish a "process" to annually review or "monitor" the "justification" for any "unreasonable" health insurance premium increases. This process will not only include the health insurers, but the State Insurance Commissioners. To help them on their way, the Commissioners are invited to dip into a pool of $250 million and, in exchange, give the Secretary their recommendations, including whether an insurer should be listed on their exchanges.

According to the Truth and Consequences article, the ACA is a stand against the insurers' "disproportionate" profits, will buttress the outmatched Commissioners' ability to review rate hikes and provide enlightened and disciplined consistency across the States' regulatory efforts. Yet, the article notes, the ACA ultimately does NOT give the Secretary the power to deny insurance premium increases, which is described as a "lack of regulatory teeth." Another problem is that, now that there's a new HHS sheriff in town, insurers will be tempted to keep premiums down by taking it out on physicians with decreased fees, more administrative hassles, utilization management, a potential return of 1990's style managed care and capitated fees with the inevitable accusations that medical care is being withheld.

The Secretary is now gearing up for this with the announcement that comments are being accepted to help craft the specific regulations that will clarify the "process," "monitoring," "justification" and "reasonableness" language. The DMCB thought it was quite clever when it actually found the web site that is accepting the comments, until it realized that about 230 other groups and individuals have already taken advantage of it.

The DMCB recalls that Ms. Leia could be unpleasant at times. Furthermore, didn't Darth ultimately turn out to be a cuddly saint of a man? Let's look at the world through his black helmet goggles......

The health insurance industry may be making gazillions of dollars but its overall return on investment has been quite anemic. States view the regulation of insurance as one of those powers included in the Tenth Amendment and it still remains how much control they'll cede to the HHS Secretary's potentially intrusive overtures. Critics may charge that health insurers can abandon a State but there are examples of States' wrecking the marketplace with unsustainable demands for low premium levels. The terms "process," "monitor," "justify" and "reasonable" are vague and the final regulations that define them promise to be an overlawyered miasma that will do little to stem our national appetite for more health care. Finally, the insurers were mostly defanged in the 1990's. It'll ultimately be up to the physician community to figure out how to deliver higher healthcare value. If the docs are not up to the task, Plan B won't be the managed care insurers or an evidence-base courtesy of the wise editors of the New England Journal. It'll be the judgment of distant Medicare mandarins holding court in windowless rooms just outside of Baltimore.

Somewhere between all that white and black is a color called grey. To get a sense of that, check out the comments web page mentioned above. The submissions make for interesting reading and run the gamut from pleas to rely on actuarial soundness (the insurers) to demands that they be put out of business (cancer survivors). Hopefully the Obama Administration will put aside its public hostility to the insurers, recognize the Journal's Truth and Consequences article for what it is and steer a middle path.

We'll see.