It is interesting that one simple idea: set the medical loss ratio at a certain rate, will have an impact on various other components such as medical costs, consumer premiums, and types of services insurers are willing to cover mentioned in the article. How these and other elements of the system are affected depends in part on the details of what constitutes medical versus administrative costs that the stakeholders are currently haggling over. As we have seen with various payment structures, incentives set up by design to produce specific behaviors can also produce unintended behaviors and consequences. The decisions that come from HHS will undoubtedly have predictable and unpredictable effects. Luckily, the NAIC specifically recommend that the rules be ‘a “living and breathing” document that will have to be adjusted as medicine and insurance evolves,’ because, by virtue of tapping the system in some defined way, insurance will necessarily evolve (this is how systems work). The question is will regulatory bodies respond in ways to stabilize the system and promote the spirit of the law, or will the power to modify the law become a political decision. This happens even with large agencies such as the CDC, which has the seemingly non-political mission of promoting public health.
The provision which seems to me the most concerning regarding unintended consequences is that the HHS has the power to ban insurance companies from signing up new customers or terminate the contract of the insurer if they fail to comply with the medical loss ratio standard. But if the insurers do not meet the medical loss ratios then they already have to pay out rebates to their enrollees and everyone is made whole again; so, why do we need the harsh penalties on the insurance companies in the form of threats to their very existence. Insurers wanting to engage the quality improvement component of the law may increase wellness and health promoting activities, which may simultaneously attract health conscious enrollees and improve the health of current enrollees, which could lead to lower claims in the long run and lower medical loss ratios. The surplus monies from the wellness initiative then can be re-invested in wellness programs, paid as rebates, or premiums could go down – all of which seem beneficial to the system and the health of the enrollees. Low medical loss ratios are not universally bad. There needs to be nuanced judgment regarding how the low medical loss ratios occur (greed and profit versus improved health and cost-effective resource allocation) and whether the insurer uses the extra money to reinvest in the health of patrons or reimburses them directly or through lower premiums. But if the insurers are afraid they may be forced out by actually designing products to save money, that could have negative consequences.
It is interesting that one simple idea: set the medical loss ratio at a certain rate, will have an impact on various other components such as medical costs, consumer premiums, and types of services insurers are willing to cover mentioned in the article. How these and other elements of the system are affected depends in part on the details of what constitutes medical versus administrative costs that the stakeholders are currently haggling over. As we have seen with various payment structures, incentives set up by design to produce specific behaviors can also produce unintended behaviors and consequences. The decisions that come from HHS will undoubtedly have predictable and unpredictable effects. Luckily, the NAIC specifically recommend that the rules be ‘a “living and breathing” document that will have to be adjusted as medicine and insurance evolves,’ because, by virtue of tapping the system in some defined way, insurance will necessarily evolve (this is how systems work). The question is will regulatory bodies respond in ways to stabilize the system and promote the spirit of the law, or will the power to modify the law become a political decision. This happens even with large agencies such as the CDC, which has the seemingly non-political mission of promoting public health.
ReplyDeleteThe provision which seems to me the most concerning regarding unintended consequences is that the HHS has the power to ban insurance companies from signing up new customers or terminate the contract of the insurer if they fail to comply with the medical loss ratio standard. But if the insurers do not meet the medical loss ratios then they already have to pay out rebates to their enrollees and everyone is made whole again; so, why do we need the harsh penalties on the insurance companies in the form of threats to their very existence. Insurers wanting to engage the quality improvement component of the law may increase wellness and health promoting activities, which may simultaneously attract health conscious enrollees and improve the health of current enrollees, which could lead to lower claims in the long run and lower medical loss ratios. The surplus monies from the wellness initiative then can be re-invested in wellness programs, paid as rebates, or premiums could go down – all of which seem beneficial to the system and the health of the enrollees. Low medical loss ratios are not universally bad. There needs to be nuanced judgment regarding how the low medical loss ratios occur (greed and profit versus improved health and cost-effective resource allocation) and whether the insurer uses the extra money to reinvest in the health of patrons or reimburses them directly or through lower premiums. But if the insurers are afraid they may be forced out by actually designing products to save money, that could have negative consequences.