Bernard DiFiore's blog

A senior health care official with the Obama Administration recently said the funding for navigator programs may not be forthcoming based on legal requirements embedded in the Patient Protection and Affordable Care Act (PPACA), according to InsideHealthPolicy.com. 

Last Thursday, the U.S. House of Representatives Small Business Subcommittee on Investigations, Oversight and Regulations held a hearing on the issue of the Medical Loss Ratio (MLR) in Washington, D.C. Titled “New Medical Loss Ratios: Increasing Health Care Value or Just Eliminating Jobs?,” the hearing was a forum for views on how the MLRs mandated by the Patient Protection and Affordable Care Act (PPACA) could impact the health care insurance industry. Most individuals testifying expressed concerns about how the MLR formula as currently structured could greatly hinder the ability of brokers and agents to support consumers and business owners when purchasing health insurance.

The Department of Health and Human Services (HHS) just released its final Medical Loss Ratio rule, and the outcome does not bode well for the broker/agent community. In the ruling HHS has rejected the NAIC recommendation to exclude broker/agent fees from insurance companies’ allowed administrative costs.

Under the rule beginning this year, individual and small group market insurance plans will be required to spend 80% of the premiums on medical care and health care improvement. Only the remaining 20% will be allowed towards administrative costs. Much the same, large group plans will have an 85% of premium requirement.

Sometime next year, it is highly probable the U.S. Supreme Court will decide whether the federal government can force people to buy health insurance or pay a fine.

In addition to the landmark impact this ruling will have on the health care industry specifically, it also could sway the outcome of the 2012 elections -- from the Oval Office to other key legislative positions around the country. No matter what, the stakes are high. Even if the issue escapes scrutiny by the Supreme Court in 2012, it’s possible that when the Justices do address the merits of the case that a Republican administration will be in the White House – along with a Justice Department that no longer will defend the Patient Protection and Affordable Care Act (PPACA).

With all the focus at the federal level on health care reform and budget spending shortfalls, a recent congressional hearing reminds us of the importance of state-based insurance regulation.[1] The hearing focused on several financial technical provisions that don’t always impact brokers directly.  However, an indirect relationship exists between the stability of health insurance offerings and the financial systems used to support and underwrite those offerings.