WASHINGTON — Health insurance companies
are lobbying federal and state officials in an effort to ward off strict
regulation of premiums and profits under the new health care law.
The effort is, in some ways, a continuation of the battle over health
care that consumed Congress last year.
Insurance lobbyists are trying to shape regulations that will define
“unreasonable” premium increases and require them to pay rebates to
consumers if the companies do not spend enough on patient care.
For their part, consumer groups say they worry that their legislative
victories could be undone or undercut by the rules being written by the
federal government and the states.
The health care overhaul provides a classic example of how the impact of
a law depends on regulations needed to interpret it. The rules deal
with relatively technical questions but go to the heart of the law,
pushed through Congress by President Obama and Democratic leaders with no Republican support.
More than 40 provisions of the law require or permit agencies to issue
rules. Lobbyists are focusing on two whose stated purpose is to ensure
that consumers “get value for their dollars.”
One bars insurers from carrying out an “unreasonable premium increase”
unless they first submit justifications to federal and state officials.
Congress did not say what is unreasonable, leaving that to rule writers.
Another provision, effective Jan. 1, requires that a minimum percentage
of premium dollars be spent on true medical costs related to patient
care — not retained by insurers as profit or used to cover
administrative expenses. Insurers must refund money to consumers if they
do not meet the standards, known as minimum loss ratios.
Michael W. Fedyna, vice president and chief actuary of Aetna,
underlined the importance of this issue, saying no other aspect of the
law would be so “influential in shaping the future of the health care
marketplace in the United States.”
The definition of medical loss ratio will “determine the willingness of
health plans to enter new markets and remain in existing markets,” he
Senator John D. Rockerfeller IV, Democrat of West Virginia, said the definition
would be just as important for consumers and small businesses.
“The health insurance industry has shifted its focus from opposing health care reform to influencing how the
new law will be implemented,” he said.
The law requires insurers to spend a minimum percentage of premiums on
health care services and “activities that improve health care quality”
Insurers are eager to classify as many expenses as possible in these
categories, so they can meet the new test and avoid paying rebates to
Thus, insurers are lobbying for a broad definition of quality
improvement activities that would allow them to count spending on health
information technology, nurse hot lines and efforts to prevent fraud.
They also want to include the cost of reviewing care by doctors and hospitals, to determine if it was
appropriate and followed clinical protocols.
Some consumer advocates, like Carmen L. Balber of Consumer Watchdog,
favor a strict, narrow definition of quality improvement activities,
limited to those that produce measurable benefits to individual
Alissa Fox, a senior vice president of the Blue Cross and Blue Shield
Association, said that if the definition is too narrow, “health plans
will come under enormous pressure to cut back quality improvement
activities, including highly effective programs to reduce hospital
But Charles N. Kahn III, president of the Federation of American
Hospitals, a trade group, said he feared that the quality improvement
category would become a “catchall for a wide variety of expenses not
directly related to patient care.”
Under the new law, insurers in the large group market are generally
supposed to spend 85 percent of customers’ premiums on “clinical
services” and quality-enhancing activities. The minimum is 80 percent
for coverage sold to individuals and small groups.
Insurers and insurance regulators say that some companies will be unable
or unwilling to meet the new standards.