Thursday, November 12, 2009

Read the Bill! Part 3; and a possible reading error

by Bruce Webb

On July 28th I put up a post on what I considered to be the most important provision of the Tri-Committee Bill as introduced. The post was called Sec 116: Golden Bullet or Smoking Gun

(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.

(b) BUILDING ON INTERIM RULES.—In implementing subsection (a), the Commissioner shall build on the definition and methodology developed by the Secretary of Health and Human Services under the amendments made by section 161 for determining how to calculate the medical loss ratio. Such methodology shall be set at the highest level medical loss ratio possible that is designed to ensure adequate participation by QHBP offering entities, competition in the health insurance market in and out of the Health Insurance Exchange, and value for consumers so that their premiums are used for services.
A Qualified Health Benefit Plan or QHBP is one that meets all the requirements outlined in the bill to be qualified for the Health Insurance Exchange itself scheduled to start on Jan. 1, 2013. Among those requirements is compliance with the detailed Acceptable Benefits Package whose fine points are to be established by the Health Benefits Advisory Committee who will be appointed after enactment of the bill. Premiums of a QHBP will be governed by requirements to meet a set Medical Loss Ratio whose set point will be established in accordance with principles set out in Sec 161.

All of this is clearly forward looking, a procedure is being set out that will govern insurance plans once the Exchange is established and three years are given to get the Health Choices Commissioner and the HBAC in place, for the MLR methodology to be established, for the final benefits package to be defined, to get all of that through the pubulication process, and to go through contract negotiations with the various insurance companies in time to meet the Jan 1, 2013 deadline. Altogether a pretty ambitious schedule, but one necessary to govern the Exchange going FORWARD.

On October 29th, a new and somewhat re-organized bill was introduced which included a whole new Title I called Immediate Reforms which were to go into effect right away on enactment of the bill. This included some truly new proposals including a new high risk pool to cover current uninsured between now and the start of the Exchange, plus a provision that allows family plans to cover children up to the age of 26. plus it moved some other protections on pre-existing conditions and prohibition of recessions forward. But it also did something curious, and ultimately inexplicable, it also moved the provisions of Sec 116 forward. In the new bill the equivalent language to Sec 116 is found in new Sec 102

(a) Group Health Insurance Coverage- Title XXVII of the Public Health Service Act is amended by inserting after section 2713 the following new section:

`(a) In General- Each health insurance issuer that offers health insurance coverage in the small or large group market shall provide that for any plan year in which the coverage has a medical loss ratio below a level specified by the Secretary (but not less than 85 percent), the issuer shall provide in a manner specified by the Secretary for rebates to enrollees of the amount by which the issuer's medical loss ratio is less than the level so specified.
`(b) Implementation- The Secretary shall establish a uniform definition of medical loss ratio and methodology for determining how to calculate it based on the average medical loss ratio in a health insurance issuer's book of business for the small and large group market. Such methodology shall be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans. In determining the medical loss ratio, the Secretary shall exclude State taxes and licensing or regulatory fees. Such methodology shall be designed and exceptions shall be established to ensure adequate participation by health insurance issuers, competition in the health insurance market, and value for consumers so that their premiums are used for services.
`(c) Sunset- Subsections (a) and (b) shall not apply to health insurance coverage on and after the first date that health insurance coverage is offered through the Health Insurance Exchange.'.
(b) Individual Health Insurance Coverage- Such title is further amended by inserting after section 2753 the following new section:

`The provisions of section 2714 shall apply to health insurance coverage offered in the individual market in the same manner as such provisions apply to health insurance coverage offered in the small or large group market except to the extent the Secretary determines that the application of such section may destabilize the existing individual market.'.
(c) Immediate Implementation- The amendments made by this section shall apply in the group and individual market for plan years beginning on or after January 1, 2010, or as soon as practicable after such date.
Okay the language is a little more bureaucratic and comes in the form of inserting new language into an existing title the Public Health Service Act but otherwise it is all the same thing, just old wine in new bottles. Right? Oh, oh, maybe not.

Yesterday on the assumption that it was the same thing I put up a post at Angry Bear STILL the Most Important Sentence in the House HC Bill citing only the (a) section. Commenter Gerald Weinand who took my advice to closely read the bill added this
Subsection (c) reads:
‘(c) Sunset- Subsections (a) and (b) shall not apply to health insurance coverage on and after the first date that health insurance coverage is offered through the Health Insurance Exchange.’.

I read through Title III. A. Sec. 304 and didn't see any refernce there to MLR's at all. Is the 85% established for policies offered through the exchange?
Well I was thrown for a loop. Instead of the orderly process set out in Sec 116 to establish rules for an Exchange that would start three years out via a scheduled process overseen by people to be appointed we have new rules that are subject to "Immediate Implementation" and which SUNSET on the day the Exchange opens. Moreover you can search through the bill as Gerald did and as I belatedly did and not find any specific mechanism to govern profits AFTER establishment of the Exchange.

I am not sure what to say, I only had this pointed out to me late last night, but my current thinking is that someone, somehow just screwed up. In their zeal to get certain protections in place right away they swept Sec 116 which clearly is focused on a FUTURE Exchange and tried to enforce its requirements on the current market. Which leads to some curious problems of language. What does ''adequate participation' mean in reference to an existing market? What about ensuring 'competition'? This language which makes perfect sense in the context of a competitive future exchange is pretty odd when applied to a market that already exists. Plus how do you immediately implement a methodology that has yet to be developed? How do you apply a process that mandates rebates on plans that are already in place based on MLRs that are on average about four points under the minimum set out in the legislation? Does every company in America expected to rebate 5% of its current premiums?

Well I got more questions than answers. But one partial solution is to get everyone on one page. Up to now people have been forced to rely on the original Tri-Committee Bill as introduced, only after Oct 29th did we have access to the bill as brought to the floor of the House, which induced some people, okay me, to read it too quickly. Well we now have some breathing room to examine the House Bill as passed with Amendments, Previously I had been linking to and using PDF versions which were pretty clumsy to navigate. The following link is to the bill as passed and engrossed, and should I think be the starting point for future discussion. ttp://
If that link is unstable you can Google it or use this pdf version:


depression said...

I have read your entire blog. But I don't understand what is dictated here ?. Is there any clear information. If yes, post here. I want to share my ideas with you. But there is little bit confusion about the subject i got just from my site.

Bruce Webb said...

Well it is more or less a reaction piece.

The other day I put up not just the preceding diary on this site but similar diaries on dKos, MyDD, and Open Left essentially rearguing my point from July that this bill DID have profit controls built in. Only to have a commenter here point out that Sec. 102 (c) of the latest version in one sentence seemingly wiped out those profit controls by sunsetting the provisions of 102 (a) and 102 (b). If I had carefully read ALL of Sec 102 of HR3962 instead of assuming it simply repeated the intent of Sec 116 of HR3200 I would have been able to hedge the contents of those three diaries. Instead that original content is linked far and wide with my subsequent caveats likely to not catch up.

In the course of the discussion it also became apparent that various commenters were using different versions of the overall bill and nobody was actually working from the most recent one as passed out of the House. So this post had the triple purpose of admitting I had a little screw-up, a suggestion to others of how to avoid similar screw ups (carefully read all provisions of any given section) and to provide a link to the latest version.

And I am not quite getting the substance here. What is your site? And what is the confusion?