The Devil Is In The Details

Stanley Feld M.D.,FACP,MACE

President Obama’s healthcare reform act is in the regulations stage. The regulations for the healthcare reform act are controlled by the Department of Health and Human Services.

“The act will reinforce the worst features of existing third-party payment arrangements in both the private and public sectors — arrangements that have already compromised the professional independence and integrity of the medical profession.”

I believe President Obama’s goal is to have his healthcare reform act fail so he can move in with a complete takeover of the healthcare system by the federal government.

The healthcare insurance industry is making an intense effort to define critical provisions of the healthcare reform acts’ regulations that will impact its bottom line. The outcome of the regulatory process will also impact the cost of healthcare insurance negatively.

“Senator John D. Rockefeller IV fears that insurers are affecting how regulators interpret the recent health care legislation.”

The law requires health insurers to spend at least eighty (80) cents out of every dollar they collect in premiums on the welfare of patients. The intent of the law should be the insurance industry should spend 80% of premium revenue on medical care.

The question is the definition of medical care. What expenses are included in determining medical care? The healthcare insurance industry wants expenses dedicated to the welfare of patients included as a benefit to be deducted from the 80% medical benefit expenses. The result would be less money to direct patient care.

Here are some of the benefit expenses included in the past. The healthcare insurance industry wants these same expenses included in future premium benefit expenses.

1. The cost of verifying the credentials of doctors in its networks.
2. The cost of ferreting out fraud such as catching physicians over testing patients or doing unnecessary operations.
3. The cost of programs that keep people who have diabetes out of emergency rooms.
4. Some insurers even insist that typical business expenses included — like sales commissions for insurance agents and taxes paid on investments

Healthcare insurers have submitted nearly 160 comment letters so far to the state regulators. Individual state regulators control the recommendations made by Kathleen Sibelius.

Most state regulators have been ineffective in controlling healthcare insurance industry expenses in the past. President Obama has provided funding and educational programs to state regulators to improve their understanding of the intent of the healthcare reform law. State regulators are deciding what precisely the healthcare insurance industry’s suggestions mean.

The meaning of the healthcare insurance company’s requests are obvious. Each expense put into the benefit expense category reduces the amount of money available for direct patient medical care.

Each expense has an overhead and is marked up for profit. The law says the medical loss ratio must be 80-85%. The law also requires the healthcare insurance industry to refund money to consumers if it spends too much on administrative services expenses and the medical loss ratio goes below 80%.

All of the expenses listed are not medical expenses. They are administrative services expenses.

The more expansive the definition of what would be permitted under the umbrella of patient care, the more money the healthcare insurance industry would make and the less medical care the patient could received.

“A lot of what they are hoping to shift over there does not — and should not — qualify to improve an individual policyholder’s quality of care,” said Wendell Potter, a former insurance executive who now is critical of the industry and represents consumers in the discussions with state regulators.

If forced to shift these expenses to administrative services expenses, the healthcare insurance industry would raise insurance premiums. The premium increase would maintain the 80% medical loss ratio required by law.

The healthcare insurance industry has already exercised this option by raising premiums as high as 37%.

The healthcare industry continues to insist that President Obama wants to discount the value of an array of its programs aimed at improving the quality of medical care. These programs should be of patient benefit expenses and counted toward the medical loss ratio..

It’s a joke. The healthcare insurance industry should not be practicing medicine. If they are combating fraud, it is a business expense. This business expense should give them a competitive advantage. Paying broker commissions cannot remotely represent improving patient care. The healthcare insurance companies should be paying physicians to set up diabetes education programs, not setting them up themselves..

Senator John D. Rockefeller IV, said “The health insurance lobbyists failed to beat the health care reform bill in Congress — but with billions of dollars at stake, we cannot and we should not expect them to throw up a white flag and start looking out for the livelihoods of American families,” .

A patient advocate group pointed out that if the six largest for-profit insurers had had to meet the new standards last year, they would have been required to refund $1.9 billion.

President Obama’s administration has already buckled by providing waivers for mini-med plans. It will again buckle to the healthcare insurance industry because it is totally dependent on the infrastructure the healthcare insurance industry provides.

We will hear a lot of noise about how President Obama is reigning in the healthcare insurance industry. He is not going to accomplish anything except reduce access to care, increase the cost of care and ration care while the healthcare insurance industry increases its profit at the taxpayers’ expense.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.