Thursday, March 31, 2011


Sometimes, in the middle of a hotly-argued partisan battle, it can make sense to look at the opinions of more distant and possibly more objective observers. When the battle involves American politics, the international press sometimes offers valuable—and possibly more realistic—perspectives than those available to readers and viewers of domestic media.

Accordingly, on the first anniversary of the enactment of the Affordable Care Act, it was particularly interesting to look at health care reform’s coverage in the influential Economist magazine.

The Economist, in its March 19-25 edition, was less than positive about the present status of reform or either the hopes of its backers or the allegations of its opponents.

In terms of current status, the magazine noted “the administration has rushed into force provisions affecting consumers directly, in an effort to win popular support…” and listed Medicare’s new preventive service coverage and drug “donut hole” rebates, as well as the new prohibitions on lifetime payout caps and on denying coverage to children with pre-existing conditions. (In fact, the implementation was “rushed” only to comply with the schedules built into the new law.) The magazine commented that while all this may seem impressive, one recent poll indicated that half of those polled believed that the entire ACA had already been repealed or at least could be unconstitutional.

The Economist went on to ask what the likely long-term impact of the ACA will be, and commented that both Democrats’ hopes for lower costs and Republicans’ forecasts of the destruction of employer-sponsored insurance are probably wrong.

As the magazine pointed out, forecasts of the death of employer coverage are countered by recent studies that project the opposite: many employees facing the individual mandate (if is not found unconstitutional) are likely to pressure their employers for tax-assisted coverage.

On the other hand, as the Economist notes, the Obama administration’s hopes for ACA-influenced cost control seem even more unrealistic, with Massachusetts, the prototype for ACA reform, now seeing cost control as the immediate urgent issue.

The bottom line, says the Economist: “America will soon have no choice but to come to grips with cost. Whatever one thinks of Mr. Obama’s reforms, there is no denying that they have brought that day of reckoning closer.

But is the Economist correct? In a later post, we’ll look at proposals for health care cost control, and their chances of success.

Monday, March 14, 2011


HHS’s bellwether decision of last week to grant the State of Maine a three-year waiver from the medical loss ratio provision of the ACA may lead to new efforts by insurers across the country to persuade states to demand similar waivers.

The HHS decision on Maine was not unexpected. The ACA language clearly allows for waivers when imposition of the MLR 80/85 percent threshold penalties would lead to disruption of a state’s insurance market. Maine, a state with very few major employers, has a higher than average percentage of small group and individual policies which typically provide higher out-of-pocket costs—and consequently higher administrative percentages. HealthMarkets, one of the two dominant insurers in Maine, had threatened to abandon the state’s individual market unless a waiver was granted. (According to a Bloomberg report, HealthMarkets, which is majority-owned by two large investor funds, was recently sued by the City of Los Angeles for selling policies with provisions that allegedly effectively eliminated needed coverage.)

Three other states (Kentucky, New Hampshire, and Nevada) have already filed waiver requests with HHS, and an additional eleven states are reported to be preparing waiver requests.

Almost certainly, every insurer with significant business in the small group and individual markets will be eying the Maine waiver decision with a view to applying pressure to those state insurance regulators who are not yet preparing waiver requests. While Maine appears to have had an unusually strong case for a waiver, the absence in the ACA of any specific measures for “market disruption” may make it difficult for HHS to reject such requests.