Written By Dave Racer:
The fight over the new Medical Loss Ratio (MLR) rule provides a vivid insight into how the federal government is running roughshod over states, and private citizens. What you will read here happens every time Congress passes a law, but when it is something new, like the Affordable Care Act of 2010, the repercussions become more visible.
First, a quick and necessary definition of MLR. This new federal law requires insurance companies to pay out in medical claims 80 percent of the money it collects in insurance premiums. The government central planners, under this rule, will allow insurance companies to use up to 20 percent of the premium for their administrative, marketing, and other program costs. The new law required the federal Secretary of Health and Human Services to write rules to guide insurance companies – and the unknown thousands of others that rely on insurance payments for their existence – to write and publish the rule by June 23, 2010. Finally, just a few weeks ago, DHHS complied with the law. Now everyone is scrambling to try to comply.
The new MLR rules, just released, go into effect January 1, 2011. Everyone whose career has hung in the balance of this new rule, has been left with just a few weeks to figure out how it impacts them, and what to do with and about it.
This week I listened in to a tele-conference led by the Nevada Commissioner of Insurance (COI). The call included key stakeholders in the provision of and payment for Nevada health care, plus the chief state regulators and enforcers of the new law. Kudos to the all of these people, who are trying their darndest to figure out how to deal with it. But ask the most basic question: By what constitutional authority or by what common sense is the federal government doing regulating this state issue anyway?
The commissioner stated emphatically that Nevada would be filing for a waiver so that it does not have to comply with certain aspects of the MLR. This is critical to them, and to dozens of other states. But they only have a few weeks to get this done, because the federal DHHS failed to obey the law, leaving all these players hanging out to dry.
The COI stated casually and confidently, and I mean no malice by this, that there is no great hurry. He knows that once Nevada files its waiver request, the DHHS has 60 days to respond, and then there is another 30 day period before the rule actually becomes final. Then everything can be nicey nice again – set back to the sanity that existed on December 31, 2010. Except that…
Professional health insurance agents have learned that, in order to comply with this new, central-government edict, the insurance companies are cutting their commission rates – by 50 percent or more. This 50 percent pay cut is effective January 1, 2011. Get it? Not yet?
By miserably failing to comply with the new federal law when it missed the June 23 and subsequent deadlines, the federal DHHS has placed the entire health care industry in a whirlwind of activity. “Do we file? If we file, what do we need? Can we get it done in time? What about everyone that is stuck in limbo in the interim? How do we do any long term planning at all? Is anyone in the federal bureaucracy even sane?”
Yet, there is absolutely nothing anyone can do but make policy on the run, work overtime creating waiver requests for which no one has the time to evaluate outcomes, because unlike the federal government, everyone else faces a hard deadline!
We have not even begun to understand how disruptive the ACA is going to be to our economy, to needed services and commodities, to jobs, and to our personal lives. Meanwhile, the federal government continues on, steamrolling everyone else into compliance.
Oh, by the way, another ruling awaited from DHHS (among thousands) is a definition of what constitutes an “unreasonable rate increase.” Now that sounds like a vital piece of enforcement language. DHHS hopes to define it by the fall of 2011. How nice of them.
About those health insurance agent pay cuts: Agents are caught in a vice, squeezed by income cuts out of their profession while DHHS and other government officials continue to draw fat taxpayer paychecks, missing deadlines, and creating havoc in the marketplace.