Wednesday, November 24, 2010

Medical Loss Ratio and the Promise of Republicans to kill the Affordable Health Care Reform Law

The new health care reform law failed to receive the blessing of Republicans at its passage. If the issue of the medical loss ratio is now being debated, it is probably in hindsight for the Republicans who abstained from contributing any vote after the initial open floor congressional debate. The denial of commitment of the Republicans to the law is well known. The enormous potential payoff of the law for consumers is what is being challenged, if Republicans are able to repeal the law. History has shown that it takes more than verbal bravado to derail a good and well-intentioned law. Lawmakers who voted to pass the Health Care Reform Law and who are still in congress owe themselves the latitude to continue to stand tall for their beliefs. Democrats owe the nation an obligation to twat any effort of the Republicans to repeal or upstage well-intentioned provisions in the law.

Beginning in January 2011, insurance companies will be required to spend 80 to 85 percent of their premiums on health services and on activities aimed at improving the quality of care of individuals’ health. There are some questions regarding whether Health Insurance companies will exploit the ‘green washing’ loophole by counting marketing cost and ill-defined wellness programs as part of the 80-85% threshold of spending on medical care. Such debates are probably in line considering that insurance companies often attempt to exploit weaknesses in laws to their financial advantage. Health Insurance companies must expect to be challenged, if they delve into the gray area of 'MLR Shifting'; this is one loophole in the Affordable Health Care Law that needs to be filled. As written, the law expects any insurance company to spend premium amount of what they take in to improve the quality of health care. The blog today addresses the implication of Republicans’ repeal of the law in the context of the Medical Loss Ratio Provision of the Affordable Health Care Reform Law of 2010.

If Republicans are able to overturn the Health Reform Law of 2010, the public would not only be denied the commitment of a greater percentage of their premium in their personal care, a huge number of Americans will return to the status where they are prevented from getting more value for their health insurance spending. The premiums of medical subscribers may not decrease and yet insurance company will continue to deny justifiable claims just because the Republicans want to remain: “Mr. and Mrs. NO!” There is no more disservice that Republican can do to American Health Care System than to repeal the health care reform law. Health Insurance companies will continue to reclassify frivolous administrative expense as health care expenses and increase their fly-by-night magic to frustrate any investigation into their books with respect to fraud along the line of administrative costs in health care premiums.

To a large extent, insurance companies are not interested in Republicans repealing the law as many of them have spent millions in implementing part of the law that has gone into effect. Some have even created glossy handbooks informing customers of how they are going to implement some provisions of the law. What the insurance companies are interested in, are how to exploit loopholes in the law to their financial benefit. Contrarily, what consumers are interested in are acceptable health insurance business practices regarding the implementation of the provisions of the law, not the Republican's bandwagon of repealing the law. The law is here to stay, what we want is the rule of the road for acceptable insurance companies behavior regarding the implementation of the law. Consumers are essentially tired of double billing that continues to erode the ratio spent on patients' care relative to the premiums doled out to health insurance companies.

The provisions of the Medical Loss Ratio is designed to encourage health insurance companies to use existing premium outlay and capabilities to meet health care needs of patients who suffer recidivism in health care quality. Through various schemes of administrative costs management, insurance companies often divert higher ratio of premiums into administrative overhead; money that should have gone into improving quality of care for patients.

Before the passing of the Affordable Health Care Reform Law, doctors and patients complained about the abuse by insurance companies of patient's premiums without anyone listening to them. A higher than usual ratio of patients' premiums were allotted by Insurance companies to administrative costs, some of them very dubiously. Premiums continued to escalate without patients benefiting from the added costs. The higher premiums that insurance companies continued to charge hardly led to improvement in care for patients, instead they fattened the pockets of the insurance companies as they continued to deny genuine claim. The new health care reform law puts a break to this abuse and asks the insurance companies to justify the medical loss ratio distribution. This essentially is one of the best provisions in American Health Care Reform Law that Republicans want to revert, when they threaten to repeal the health care reform law.

The Medical Loss Ratio provision provides the foundation for discussion with health insurance companies on how they develop the sliding scale for administrative as against actual health care delivery costs from patient premiums. The provision calls for insurance executives to examine the following questions: 1) how much of patients' premiums is actually going into their care; 2) Where are insurance companies exceeding targets, and where are they falling short of expectations; 3) What are the main drivers of the rising administrative costs in health care and what are insurance companies doing to pull back the ever increasing ratio of premiums going into administrative costs; 4) what are the current and future critical challenges to quality of health care delivery as insurance companies and health delivery agencies attempt to meet the provisions of the new law; 5) what are the most critical concerns that doctors and specialists have regarding how they are being paid and how the health care needs of their patients are being met; 6) What should be insurance companies' short-term and long term Strategies in developing humane business goals that address the concerns of patients and their doctors regarding the care they deserve and offer; and 7)what has been the obstacles to achieving health insurance business goals as they attempt to manage a healthy medical loss ratio consequent to provisions of the Affordable Health Care Reform Law of 2010. Whether insurance companies are using a four box or another tool to remain pragmatic and responsive to the needs of the law is better left for time to tell. What consumers are looking forward to is an opportunity for the insurance companies to self-police their operations before the law courts are invited in for a more objective assessments of their efforts.

The effort to repeal the Affordable Health Care Reform Law of 2010 threatens not only the stability of the American Health Care System, but also, insurance companies' ability or arrangement to implement the current provisions of the law that has gone into effect. The insistent cries from Republicans that the US government has taken over the health care system is not only a disservice to the public, it is tantamount to a crocodile cry, specifically designed to derail and confuse insurance companies that are currently grappling with the issue of managing the provisions of the medical loss ratio dynamics. Imagine for a moment that Republicans are able to repeal the law, what would consumers who have questioned the huge ratio of their premiums that insurance companies have repeatedly diverted to administrative costs, benefit from this Republican's Shenanigan?

How would Republicans convince the public that their effort is being made in good faith, especially when some of the insurance companies' frivolous schemes and programs classified as administrative costs have been determined as frivolous and downright ridiculous by consumers and the courts? Would Republicans like to be on record for being the stumbling block before the quality of health care that Americans receive in hospitals? A repeal of the law will demonstrate once again what one of the congressman from Florida, Alan Grayson (D), once said in the heat of the debate over the health care reform bill, the Republicans Health Care Plan is: Don‘t get sick, and if you do get sick, die quickly!

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