The first major set of health reform regulations, governing the "medical loss ratio," resembles the victim of a Mob kneecapping–hobbled but surviving–after a corporate lobbying onslaught. And the fight is not yet over. It's just moved from the National Association of Insurance Commissioners to the White House. Which raises the question: Given the overwhelming lobbyist power of insurance companies, is this regulatory battle of a thousand cuts worth pursuing? Would consumers get a better result at the state level, since the health reform law explicitly allows states to enact a true "public option,"–a sort of Medicare for everyone?
The long battle over the medical loss ratio–a term describing the portion of premium dollars actually spent on medical care–will never make good cocktail party conversation. But it is summed up with clarity in the New England Journal of Medicine by Prof. Tim Jost, who spent most of a recent sabbatical as a consumer advocate at the National Association of Insurance Commissioners.
Of course it's a medical journal, so his rhetoric is cool and dry–even when describing insurers' outright victory in getting to deduct all federal taxes (which makes it appear that they're spending more on medical care). As Jost notes, it's likely that most insurance companies won't have to lift a finger to comply with the weakened rules, which also count "health quality" activities–likely including those "Let GlobalMega Insurance Show You How to Live Right" messages–as medical care.
Even the most egregiously wasteful, restrictive and inefficient health plans can seek blandly named "waivers" to keep doing what they do so badly. The insurers' complaints about the watered-down regulations smack of the rabbit complaining about the briar patch.
The same protracted fights will go on, nationally and in the states, over the Health Exchanges, which are meant to make it easier in 2014 for consumers to compare and buy health insurance at a guaranteed quality level in each state. But what really frightens the for-profit health insurance industry is that the exchanges–and the advent of mandatory health insurance–could also be a vehicle for a new kind of competition–the public health insurance option the lobbyists killed last year in Congress.
If health insurance companies keep it up with the double-digit rate increases, especially in states like California whose captive legislators refuse to allow rate regulation, the public desire for anything-but-Blue-Cross may become a powerful force against the insurance lobby. State legislators who have been content to take the insurance industry's money and offer only excuses to voters should start looking over their shoulders.
The battle over health reform regulations will continue. But the regulatory fights are rear-guard actions. If the opportunity for a leapfrog to the public option seems ripe, the for-profit insurance industry won't be able to kill it everywhere and forever.