Yesterday, I looked at the myriad ways in which the insurance industry has already tried to take advantage of the wiggle room in the Affordable Care Act. The lack of meaningful checks on their profit-seeking and the lack of meaningful enforcement in areas where they violate the law seem to make this just an obvious outcome, as Jon Walker notes today. Here’s how I put it:
The ACA creates a law forcing a high medical loss ratio; insurance companies try to game it (consumer advocates appear to have won the first round, however). The ACA put into place early provisions like limiting annual and lifetime limits and allowing children to stay on their parents’ policies until the age of 26; insurance companies use that as a pretext to jack up premiums, far beyond the cost of these measures. The ACA chopped the donut hole in half in the near term and eventually will eliminate them; pharmaceutical companies may respond by increasing drug prices to offset the cost of the discount.
So in addition to having to fend off the slow chipping away of the law by the GOP, especially if they gain power over one or both houses of Congress, Democrats have to deal with the foxes they left in the henhouse, who are systematically working to preserve their own profits at the expense of consumers.
I put the question to Nancy-Ann DeParle of the Office of Health Reform, who joined bloggers and writers for a conference call yesterday. The White House is attempting to roll out the new consumer protections which trigger on the 6-month anniversary of the signing of the Affordable Care Act, calling them a “Patient’s Bill of Rights.” These include the aforementioned ban on excluding children with pre-existing conditions; a ban on rescissions due to “unintentional” mistakes on applications; bans on lifetime limits for coverage and a phase-out of annual limits starting at $750,000 (the annual limits ban will be complete by 2014); ban on limiting choice of doctors in new plans; ban on restricting emergency room care to in-network doctors and hospitals; a guaranteed right to appeal insurer decisions on new plans; the ability for young adults to stay on their parents’ plans until age 26; and free preventive services, with no co-pays, on new plans. “A couple years ago, these consumer protections would have been thought impossible,” DeParle said.
It’s worth noting that the provisions I attributed to “new plans” won’t affect grandfathered plans, so it will be many years before all Americans experience the full benefits of these laws.
But we’re already seeing insurance companies skirt the law in a variety of ways. How do you resolve the inherent tension of for-profit companies at the heart of the system, with every motive to subvert the law?
DeParle responded with disappointment at insurance companies dropping child-only policies, noting that many insurance companies started doing this in April and May. “To put it in context, a few hundred thousand children are in child-only policies, because of employer plans that have coverage only for themselves and not dependents,” she said, “and insurers are not proposing to drop already written policies.” She hoped that children have more options now than before, through Medicaid and SCHIP, so that a very small number would be affected by the child-only policy shift.
As for the persistent effort from insurers to undermine the law, DeParle agreed that insurers have engaged in these efforts. She claimed that the difference now is the transparency around it. “We have new resources, new scrutiny, sunlight cast upon the regulatory framework, as well as what HHS will do to establish what a reasonable rate increase is.” In addition to the willingness of politicians to cast light on the practices of insurers, DeParle highlighted the fact that North Carolina Blue Cross and Blue Shield just announced $155 million dollars in refunds to about 200,000 customers because of the new law. It turns out that BCBS “over-reserved” and had excess funds above the medical loss ratio, and the Insurance Commissioner in North Carolina, working with the federal government, forced the return. “Insurance commissioners are doing the math,” said DeParle, citing a new aggressiveness from the state regulators. “It’s a new day when it comes to oversight. There’s a tension, it’s an inherent tension, but I’m happy about where it’s going.”
Plenty of things in the law could have overcome or eliminated this inherent tension, but they weren’t chosen. As a result, regulators and insurers will play this cat and mouse game with the health care system.