Monday, February 22, 2010

Did Wellpoint's Rate Increase Lead the Obama Administration to Propose the Health Insurance Rate Authority ("HIRA")?

Wow. 'The President's Feb 22 Proposal' will cut health premiums, increase competition, promote accountability, eliminate pre-existing condition denials and reduce the deficit. The Disease Management Care Blog knows it is so, because that's what it says on the 1st page.

The DMCB is still chewing on this, but here are some of the more important features in store for commercial insurance reform: the individual insurance mandate is still there with financial assistance consisting of a mix of 'carrot' tax credits and direct payments to insurers. These are combined with the "stick" of "assessments" (a.k.a fees) for those who go without insurance. In addition, employers still need to provide insurance coverage (helped with tax credits for small businesses) or also face "assessments." Once those new fangled insurance exchanges kick-in in 2014, there can be no denials of coverage based on pre-existing conditions and there can be no annual or lifetime limits. As for those so called 'Cadillac' plans, the plan is to delay the excise tax and raise the premium threshold. Many of the comparative number details can be found in the Wonk Room.

There's one other key feature of commercial health insurance reform, which is quoted below:

"...creating a new Health Insurance Rate Authority to provide Federal assistance and oversight to States in conducting reviews of unreasonable rate increases and other unfair practices of insurance plans..... health insurers must submit their proposed premium increases to the State authority or Secretary for review... if a rate increase is unreasonable and unjustified, health insurers must lower premiums, provide rebates, or take other actions to make premiums affordable....(the Government will) provide needed oversight at the Federal level and help States determine how rate review will be enforced and monitor insurance market behavior" (bolding from the DMCB).

The alleged origin of all this, of course, is Wellpoint's political tone deafness when it raised its insurance rates right in the middle of a national debate over health care reform. It would appear that when Anthem's February letters went out announcing the rate increase, the White House announced that enough was enough, went on offense and came to the rescue with its proposal for increased Federal "HIRA" oversight.

The DMCB doesn't think so.

According to this article, the California Department of Insurance knew of Wellpoint's plans in mid-November. The DMCB can't believe that the White House only recently learned of the planned rate increase and was just spurred to action by shocked moral outrage. More likely, it decided weeks ago that it needed cover for its tweaked evolving health reform proposals, looked around for an insurer it could mug and naturally landed on that perennial recissioning, coverage-denying, for-profit and outrageously paid executive-led Wellpoint. Talk about a political windfall of perfect timing.

But the political DMCB doesn't mind, even if it hasn't been invited to the February 25 Health Care Summit confab. Here's why.

In the end, it really doesn't make any difference if the States are presiding over health insurance premium increases or the Feds are. In the end, each line of business within an insurance portfolio needs to stand on it's own two feet: the DMCB and Ms. Sebelius know that health insurers a) have a fiduciary duty to charge actuarially sound rates that will pay the medical bills, and b) are not allowed to cross subsidize between insurance lines, no matter how profitable one or more may be. While the Washington DC's "assistance," and "oversight" are technically an intrusion on the States' Departments of Insurance, the DMCB is betting that most of the Commissioners won't mind giving up that political and regulatory headache.

Which is why the DMCB will close this posting with this piece of advice to the Republicans: even though you may discern that this is another repugnant expansion of Washington's bureaucracy, it's OK to yield on this particular issue in front of the C-SPAN cameras because it won't ultimately make that much of difference. You'll look less like the 'Party of No' if you agree and, who knows, maybe you can leverage this in exchange for a compromise over what's really important.....oh, like physician liability insurance reform, further rolling back all gun control laws or, better yet, getting an agreement from Jon Stewart to book at least five softball interviews to make up for this blunder on The Daily Show with y'all.

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