Tuesday, October 12, 2010

Insurance Regulations and Waivers

As there have been numerous articles on this issue in the past several days, I thought it worth summarizing some of the key nuggets and developments:

    • While there have been numerous news articles indicating the Administration has granted waivers for limited benefit plans regarding the new mandate to eliminate annual and lifetime limits on benefits, how the new medical loss ratio requirements will be applied to these plans remains a significant unknown.  You’ll recall that it was the MLR requirements, and NOT the prohibition on annual and lifetime limits, which forced McDonald’s to contemplate dropping coverage, as the Wall Street Journal first reported.  Yet the New York Times article last week noted that insurance commissioners do not believe McDonald’s and other limited benefit plans should receive a waiver from the MLR requirements.  In other words, it’s entirely possible that the firms who received waivers on annual and lifetime benefits last week could still end up dropping out of the market, if a solution cannot be found regarding the new MLR restrictions that take effect beginning in January.  (Is it also possible that the Administration is granting waivers on annual and lifetime benefits now, only to refuse to grant waivers to those same plans on the medical loss ratio restrictions after November 2?)
    • A USA Today story on the limited benefit waivers noted that Massachusetts needed to obtain federal waivers from the new annual and lifetime benefit restrictions for its young adult policies.  Some may wonder whether this development means the young adult coverage sold on Massachusetts’ Connector was inadequate, or whether instead the strict benefit standards being imposed under the federal law are excessive and therefore contributing to premium increases.
    • Liberal New York Times columnist David Leonhardt argues that the issue of limited benefit policies illustrates “the real problem was the status quo,” and that the fact that the law “is beginning to disrupt the status quo – that some insurance policies will eventually be eliminated and some inefficient insurers will have to leave the market altogether – is all the proof we need” of the “progress” created by the law.  That position of course belies the stated promises of President Obama, who assured Americans as recently as April that “If you like your insurance plan, you will keep it.  No one will be able to take that away from you.  It hasn’t happened yet.  It won’t happen in the future.”



On a related note regarding regulations, the US Chamber recently launched a new website regarding the impact of regulations on jobs – the health care section notes that the new law allows for 41 new rulemakings, 97 studies and evaluations, and 129 various reports.  Just like all of the above, it’s an illustration of the encroaching impact of government on the American health care system – and on American job creators.