Liberals call for tight restrictions on how health plans can spend their money

A liberal grassroots group joined with Sen. Al Franken (D-Minn.) on Thursday to call for tight restrictions on how health plans will be allowed to spend health insurance premiums under the healthcare reform law.

“There is a new fight in healthcare reform — and if the insurance companies win, we lose,” Ethan Rome, executive director of Health Care for America Now (HCAN), said at a press conference unveiling a new report on the issue of medical loss ratios. “If the $892 billion health insurance industry wins this new regulatory fight, they’ll be able to deny people’s care and call that the administrative cost of medical care under the new health insurance law. We cannot and will not let that happen.”

The report found that the ratios are below those called for in the new law in various markets and states across the country. It says insurers would have had to pay $1.9 billion in rebates to consumers if the new law had been in effect in 2009.

Added Franken, who introduced the medical loss ratio as an amendment during the healthcare reform debate: “I always said that this law could have been renamed ‘the Secretary of HHS shall ... bill of 2010’ because the reality is that the devil is really in the details.”

At issue is what kind of spending will be considered healthcare expenses under the regulations  being drafted by the Department of Health and Human Services and the National Association of Insurance Commissioners. 

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, called the report “a desperate attempt to distract attention away from the fact that these regulations could put at risk important services and benefits that improve the quality of care for millions of patients.”

The healthcare reform law requires insurance plans to spend a minimum portion of premiums — 85 percent in the large-group market and 80 percent in the small-group and individual market — on care or rebate the difference to consumers. As a result, the definition of what constitutes care is one of the most controversial debates going on right now, worth hundreds of millions of dollars to health plans, according to HCAN.

HCAN joined unions and other groups in a letter to lawmakers last week urging them to push back against insurance company efforts to count certain expenses such as fraud prevention, network management and provider credentialing as health expenses. The letter also criticizes proposals to count costs of investigating, paying or denying medical claims as medical care. And it urges that any exemption from the medical loss-ratio requirements allowed because the provision would disrupt a state’s insurance market be as narrow and as limited in time as possible.