There's a new fight around health insurance reform and if the insurance companies win, we lose. If the $892-billion health insurance industry wins this battle, they'll be able to deny people needed care and call the administrative costs of that denial "medical care" under the new health care law.
I'm talking about the fight over the so-called "medical-loss ratio." The insurance companies are pressuring state insurance regulators to undermine a key provision of the law to protect their excessive profits. They want to gut the federal requirement that insurers spend at least 80 percent of premiums on medical care in the individual and small-group markets and 85 percent in the large-group market, or rebate the difference to consumers. The industry is determined to undercut the new law and hold onto its ability to rip off families and employers. They want to continue their long-time practice of spending low percentages of premium revenue on actual medical care in certain states and for certain customers.
If the new law had been on the books in 2009, the six largest for-profit health insurance companies would have been required to refund $1.9 billion for that year alone, according to a Wall Street analyst. Despite the industry's whining, this rebate would have represented only a fraction of their massive profits. The top five for-profit health insurers alone recorded $12.2 billion in profits in 2009.
The definition of "medical care" is at the core of this fight. The law sets a minimum for how much of each premium dollar insurance companies must spend on actual health care. So they want to change the definition of "medical care" to include things that aren't medical care and that have never been considered as such. And the insurance companies are shameless in just how far they will go. They really are trying to have "underwriting," the process by which sick people are weeded out of eligibility for coverage, defined as a medical expense! Along with claims processing, call centers and other expenses that aren't about the actual delivery of care.
This is why we must implement and enforce the new law as it was intended - to hold the insurance industry accountable, stop the worst of their abuses and rein in skyrocketing costs.
Naturally, the insurance companies are doing everything they can to undercut the law by attempting to change the very definition of "medical care" so they can feed their insatiable greed. As Senator John D. Rockefeller IV of West Virginia said in a hard-hitting, fact-filled letter to the President of the National Association of Insurance Commissioners (NAIC), the insurance industry is "sparing no expense to weaken this new law and the protection it promises to America's consumers." The Senator described the insurance industry's effort to influence the NAIC, the organization charged with making detailed recommendations to the Department of Health and Human Services (HHS) on the definitions of medical-loss ratios and other key regulations.
Today HCAN released a comprehensive report on this issue with Senator Al Franken of Minnesota and Representative Bill Pascrell Jr. of New Jersey, along with members of the Main Street Alliance, a network of state-based small businesses. The report shines a light on the accounting tricks the insurance companies want to play to game the medical-loss ratio system, and it exposes their lobbying offensive to protect the status quo and undermine this part of the law before it even takes effect.
Thankfully, HHS Secretary Kathleen Sebelius and the Obama Administration are aggressively implementing the insurance accountability provisions in the new law.
It all comes down to this: Insurers want to use this regulatory fight to take back control of our health care, and we can't let them succeed. We think things like going to the doctor should be considered medical care, and marketing and denying care should not. We don't think that insurance companies should count the cost of stacking and counting their profits as part of your "medical care." That's why a seemingly arcane debate over the definition of the medical-loss ratio is so important.
Cross Posted at the NOW!Blog
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