Medical loss ratio ruling - good news for those with individual insurance policies

On November 22^nd, the Department of Health and Human Services issued rules regarding a part of the health reform law known as the medical loss ratio. The new rules require that all insurers must spend at least 80% of the premiums they collect from customers on direct medical care. Currently, some insurers spend as little as 70% of premiums on medical care, such as doctor and hospital bills and quality improvement initiatives with the rest of the money going to overhead such as administrative costs, advertising, and profit. The new rules should help some consumers see decreased insurance costs, though the insurance companies have been lobbying heavily to have as many expenses as possible classified as direct care costs. In the end, though, insurers will not be able to classify running customer service hotlines, executive pay, and other administrative costs as direct care, so they will now have much more of an incentive to spend more money on patient care and less on administration. Some subscribers might actually get a check in the mail as a rebate on their coverage if it turns out the insurer charged too much money.

This will mostly only apply to people who buy insurance individually; people who get insurance through their employer (if their employer is a large business) will likely not see any change or get any rebate, as most group insurers have a medical loss ratio of 85-90% because of improved administrative efficiency and decreased need to advertise to individuals.

Of course, when we look at Medicare our requirement of a medical loss ratio of 80% seems excessively generous; Medicare’s medical loss ratio is 98-99% because their administrative costs are so low. In other words, of the tax money we give to Medicare, only 2% at most goes to overhead. This is one of the arguments made by single payer advocates; by not having to advertise, by having streamlined enrolment, reimbursement, and funding streams, and by not having to profit from providing care or pay executives, Medicare saves lots of money.

This new ruling on the medical loss ratio doesn’t get us anywhere near the efficiencies enjoyed by Medicare, but it’s a good first step.

6 months of health reform!

It's hard to believe it's been 6 months since the Affordable Care Act (aka Health Reform) was signed into law by President Obama. New benefits that have just started include:

Extension of coverage to young adults
Now young adults whose parents have insurance can be included on their parents' plans, meaning access to affordable health care for young adults up to age 26. For more information see the Young Invincibles website. The Young Invincibles were a critical voice for health reform and continue to work for better health access for young adults.

No more coverage exclusions for children with pre-existing conditions
Believe it or not, up until now children could be denied for coverage for pre-existing conditions, even conditions they were born with. In 2014, the same will be true for adults as well.

Restrictions on annual limits
Many people who have insurance find themselves facing astronomical bills after a serious illness. Starting now, insurers must pay at least the first $750,000 of expenses incurred in a year, and in 2014 these annual limits will be eliminated.

For more information see the Kaiser Health News website

March 22 Health Insurance Reform March on Washington, DC

It was a rainy day and the buses were late but that didn't slow the momentum in the least. Two buses from Union Square set out carrying doctors, medical students, and other health care professionals to join hundreds more in Washington from around the country. The members of NPA-NY who were in attendance were Manisha Sharma, MD, Sharon Phillips, MD, Bill Jordan, MD, and Rafi Pristoop, MD.

The entire group first convened at Freedom Plaza where doctors, medical students, and nurses, from DC, New York, Vermont, Connecticut, Boston, Philadelphia, Virginia, Chicago, North Carolina, Florida, and California, gave personal testimonials about the need for Health Insurance Reform.



Next, we Marched to the Capitol in the pouring rain. Dr. Manisha Sharma led the crowd with spirited cheers using her megaphone. This is a great feat because although doctors are smart, they are generally rather dull people. So to get them yelling at the top of their lungs takes great persuasion and charisma. While we waited in line to enter the Senate Hart Building, where the Press Conference was to take place, we ate our soggy boxed lunches.



At the Press conference Senator Bingaman (D- NM), Rep. Jim McDermott MD (D- Seattle), Rep. Jan Shakowski ( D-IL) spoke along with leaders from Doctors For America, the American Academy of Pediatrics, the American Academy of Family Physicians, and Nurses Alliance, showing support for the historic bill signed into law. Dr. Rafi Pristoop got to stand on stage next to the speakers. Again, Dr. Sharma led the audience in with great spirit. Senator Bingaman even made the comment, "I've attended a lot of events in this room and I've never seen so much enthusiasm before."



After the Press Conference Doctors split up and spoke to their respective Senators and Congresspeople. The New York delegations sent doctors to the offices of Senator Schumer, Senator Gillibrand, Rep Yvette Clarke, Rep McMahon, Rep Murphy, Rep Owens, and Rep Towns.

The final event of the day was a happy hour at a bar where everyone got to celebrate and relax after over a year of dedication, fighting, and hard work.

I'm sick of the politics. Patients need health care reform.

At this point it seems like everyone’s frustrated with health care reform. Liberals feel betrayed about the public option and worry that we’ll see little actual “reform.” Conservatives are skeptical about the proposals’ ability to control costs, and worry that expanding public programs without stronger cost controls will leave our country further in debt. Having debated compromises, and compromises of those compromises, many of us are left wondering whether health care reform even matters anymore. Well, as an American, I am disappointed in the broken political process; as a progressive, I worry my core values of justice and equity are being undermined; but as a doctor, I cannot give up on reform.

More than a year ago, Mr. Nelson*, a hypertensive man in his 50’s with two grown daughters and a college bound son, came in as a new patient. He had lost his job as a salesman and with it his health insurance. For awhile, he paid out of pocket for the medication prescribed by his previous doctor, but he could no longer afford them. The community health center where I work offers sliding scale payment and low cost medications, so when he began having severe headaches, he came in to see if we could help. His blood pressure was sky high and I was concerned that he could have a stroke, but he did not want to go to the emergency room fearing the costs. Instead, I wrote a few prescriptions, saw him several times over the next few months, and we finally got his blood pressure under control.

I saw Mr. Nelson again a few weeks back, and he has still been unable to find work. His wife’s employer does not offer health insurance, and with her salary and his unemployment benefits, their income is too high for Medicaid. He could purchase coverage on the non-group market if it was affordable, but he has looked and this is not an option. Over the past year, I have been worried about his daytime fatigue and snoring, and I suspect he has obstructive sleep apnea. However, he cannot afford the thousands of dollars for a sleep study and respiratory equipment, so he must delay this medical care. It is a gap that the health center cannot fill. Each visit he is upbeat about his family and his blood pressure, but I cannot help but worry that sleep apnea is causing permanent damage to his heart and lungs.

I have other patients like Mr. Nelson, and I’m sure there are many other Americans out there as well, who are just getting by, and maybe cutting their pills in half to make them last, and delaying medical care as they focus on more pressing matters like putting their kids through school. The health care horror stories are heart breaking, but thinking about my patients on the verge of a bad outcome or one illness away from bankruptcy, I feel impassioned to demand reform now. We cannot wait for the perfect plan. A health insurance exchange with subsidies for private insurance is not the same as a public health insurance option, but it would offer affordable coverage to Mr. Nelson. If 45,000 preventable deaths annually are attributable to lack of health insurance, the Senate bill, which covers 2/3 of the uninsured with subsidized private insurance and expanded Medicaid, could potentially save 30,000 lives. If this is not the purpose of health insurance reform, I’m not sure what is.

Many are calling for the House to pass the Senate bill, and fix issues like the level of premium subsidy via reconciliation. This won’t remake the American health care system into a model of efficiency and equitability, but it does move us from debate to action. It will help 30 million Americans who are uninsured. It will provide security to those with private insurance. It will strengthen primary care, prevention, and wellness. Waiting any longer is just not an option.

*I thank Mr. Nelson for allowing me to share his story. I have changed his name and other minor details in order to protect his privacy.