Keeping Them Honest
by digby
Bruce Webb discusses HR3200 and explains why it works and why it's so superior to the Baucus bill even beyond the Public Option. And he homes in on one particular provision:
But here is the biggee, the single provision that guts the insurance companies current predatory model, the one you can bet they are most eager to kill. It is deliberately written to be innocuous but does more to control costs and insurance pool gaming than any other.
Sec 116 ENSURING VALUE AND LOWER PREMIUMS.
(a) IN GENERAL.--A qualified health benefits plan shall meet a medical loss ratio as defined by the Commissioner. For any plan year in which the qualified health benefits plan does not meet such medical loss ratio, QHBP offering entity shall provide in a manner specified by the Commissioner for rebates to enrollees of payment sufficient to meet such loss ratio.
Under the current model insurance companies make money in two ways. One by insuring people who likely won't need are and two by denying care to those who do need it. Their stated goal is to reduce their Medical Loss Ratio to as low a number as they can. Under Sec 116 this doesn't work, the more successful you are at denying care or insuring people who don't need it the bigger the rebate check has to be.
The key is getting the target MLR set at the right level, which is where the PO comes in, its MLR effectively establishes the level against which the private plans have to compete and so keeps the insurance company from gaming the Commissioner in an attempt to get a lower MLR (equals higher profits and dollars for exec compensation). But if pushed to the wall you could control insurance companies premium increases simply through strict application of the provisions of Sec 116.
Sec 116 = Premium and Profit Control. It is even more key to the long-term success of health care reform than the PO itself.
It sounds good to me. But as a non-wonk, political observer, I am still very, very, very leery of anything that 1) depends upon Washington "strictly applying" any provision that hurts insurance companies and 2) mandates that Americans write checks to private insurance companies. It may end up that way, but the politics are much harder than if you have a public option for people to choose --- I'd even prefer that it was called something like Medicare Part X (or whatever,) so that there would be no question that the money was going into the pockets of the loathed insurance industry.
The NY Times gives us a hint about how the right is going to respond to the mandate and it isn't pretty:
The requirement that everyone buy health insurance moved a step closer to reality last week — and possibly a step closer to being challenged in court.
Conservatives and libertarians, mostly, have been advancing the theory lately that the individual mandate, in which the government would compel everyone to buy insurance or pay a penalty, is unconstitutional.
“I think an individual mandate will pass, and I think it’s going to be very vulnerable because it exceeds Congress’s constitutional authority,” said David Rivkin, a lawyer who served in the Justice Department under Presidents Ronald Reagan and George Bush. Mr. Rivkin spelled out his argument in a recent op-ed article in The Wall Street Journal that he co-wrote.
“If you say the government can mandate your behavior as far as this type of insurance goes,” he said, “there will be nothing the government can’t do. They can control every single way in which you dispose of your income.”
Reform advocates will undoubtedly look back on all this and wonder if the politics of single payer would have actually been easier. In this particular respect, it almost certainly would have been. There's no doubt that the federal government has the power to tax for certain benefits or compel payments to outside parties for certain optional privileges (like driving.) But whether it has the power to compel all citizens to pay money to particular private interests is an unknown. Who knows what the Roberts Court will decide on that?
Of course, if a public option is in place it's a different argument altogether, isn't it?
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