Monday, December 21, 2009

MLR, CBO and "the" Bill....

This has been a bit of a longer process than some, and so far, Obama has not had to use the nuclear option (aka Budget Reconciliation).

What was interesting was Lieberman's apparent about face last week. Especially on something that he had wholeheartedly supported 3 months earlier. Something didn't seem right. My friend over at Angry Bear nailed it.

Lieberman has received most of his money from the financial and insurance industry. One of the parts of this bill is a minimum MLR. The insurance CEO's are going completely ape about this. To be fair, the minimum MLR isn't new, it was in the House legislature initially as Sec:116, and due to pressure at that time, was removed. The insurance companies thought they had seen the last of it, they were wrong.

MLR stands for Medical Loss Ratio, and the insurance industry defines it as the number of cents per dollar coming in, that are paid out for medical services. During a hearing this summer, Senator Rockefeller was grilling the insurance companies about this ratio, and many LIED to congress. They stated that their MLR was already 90% or higher. But research then showed, that for employees at large business, the MLR averaged about 84%, for small business it was closer to 80%, and for individuals purchasing insurance, it was only 76%.

This means that for an individual buying health insurance, 25% of their payments goes to administration, marketing, and/or profit.

The initiative in the current Senate bill mandates a minimum of 90% for all insurance companies, while the House bill, only mandates 85 and 80% respectively.

Hence, Lieberman's temper tantrum. It had absolutely nothing to do with the Medicare buy in (which is a bad idea for several other reasons), but everything to do with protecting his money train.

Now, fast forward to this past weekend, and the CBO releases this memo..


The problem is, that this makes no sense. I am trying to understand how mandating a minimum MLR causes THEIR REVENUE and FINANCES to be considered in the federal budget. We regulate the financial industry, we regulate the energy industry to avoid price gouging, and neither are considered in the federal budget.....I don't quite get it, and neither do other economists. Although it now seems in a correction issued yesterday, that the CBO may be backing away from this a little. My initial impression is that this is similar to the HR 1252 bill that was titled "The Federal Price Gouging Protection Act". Not sure, if we mandate insurance, how regulating the insurers causes them to become financial liabilities against the federal budget.

This was on angry bear....

I just listened to the conference call with Gov. Dean and Wendall Potter.
Toward the very end of the call, the issue of medical loss ratio regulation came up. Seems like a reasonable thing to regulate especially if we are going to get Chicago School of Economics style health care reform implemented via the Shock Doctrine method. (Yes, I've finally started that book and I've got to say, what is happening here with health care reform reads all too familiar.)

Unfortunately, according to Gov. Dean, the CBO keeps scoring MLR regulation as a hit (as in mafia take down) to the budget. Seem from CBO's perspective, if you regulate that the MLR can be no less than somewhere around 90%, such a number placed on profit ability makes all of the nation's health care a government budget item. Thus, something like $2.5 trillion gets added to the budget numbers.

Funny thing this CBO view. Basically this means that I (We the People) can mandate that I buy insurance, that I can only buy it from the private market, that I can write the rules of the market that I buy into, but I can't tell a corporation that is granted a privilege by me to spend it's money on the product it has been granted a privilege to provide?

Maybe the CBO figures because I decided to help some people in buying the mandated insurance, that by regulating the MLR, I'm making that money a greater expense on the budget because now 90% is going to health care services and not 70%? I really can't figure this one. Is the CBO really saying that I (and you) the government, can not assure that I'm going to get my money's worth? How come this issue does not come up when the government negotiates drug prices for the VA?

I really think, after watching our congress deal with health care, finance reform, military, that we have a bigger problem in this nation regarding economics and who is the boss here than we are willing to admit. Hint: It's We the People who is the government. It just seems that we have definitely, completely entered the realm of reality where "the market" is the purpose and not the means. We have been turned to existing to serve "the market". We have put "the market" before all our needs and desires for us as people. This is primitive idolizing behavior. This is sick.

I have to go plow now.

1 comment:

Texas reader said...

Thank you. I have always enjoyed reading medical blogs but over the last few months have reduced the number I will read dramatically due to the hostility of so many doctors to health care reform.

My own internist, a Republican with photos of himself with various Republican office holders all over his office, is so disgusted with insurance companies he is now in favor of SINGLE PAYOR.