It is easy enough for those of us who are debating the merits of ObamaCare to lose track of just how profoundly this law has changed everything about health care and health insurance. Take just one element — the regulation of health insurance, which is is no longer a state, but a federal responsibility. This one change would have been unthinkable just a couple of years ago. Since the founding of this Republic, insurance regulation has always been left to the states. The one break in that history came in 1944 when the Supreme Court ruled in United States v. South-Eastern Underwriters Association that the Commerce Clause authorized Congress to regulate insurance. This was part of the massive expansion of the Commerce Clause that took place in the decade between 1935 and 1945.But in this case, Congress wanted to have nothing to do with it, and it enacted the McCarran-Ferguson Act the very next year (1945) and returned insurance regulation to the states. Congress did oversee the regulation of “employee welfare benefit plans” through enactment of laws such as ERISA, COBRA, HIPAA, and various mandates on maternity and mental health coverage, but it always exempted “the business of insurance” from federal involvement. Even the regulation of private insurers providing supplemental coverage to Medicare was left to the National Association of Insurance Commissioners and state insurance departments. So, other than a one-year interlude, the regulation of insurance companies has been controlled solely by the states — until now. The significance of this move hit home in a letter cited by Bill Boyles of the Consumer Driven Market Report. This is from the HSA Council to Jay Angoff, Director of the Office of Consumer Information and Insurance Oversight of HHS. The letter asks that high-deductible HSA plans be subject to a different Medical Loss Ratio (MLR) standard than other plans. It makes several points in great detail:
- That these plans have a smaller premium volume over which to spread fixed costs.
- That the claims volatility is higher for high-deductible plans (covering only very high expenses means the plans are subject to more unpredictable surges in spending than plans that cover small dollar routine expenses.)
- That smaller enrollment in high-deductible plans means there is less “credibility” in premium estimates (HHS currently acknowledges that problem for plans with 75,000 or fewer lives, but the letter argues that there should be a risk adjustment that goes beyond the 75,000 limit.)
The letter asks HHS to include a “cost-sharing factor” and a “credibility factor” when determining allowable MLRs. Failing that, it requests that contributions to HRA or HSA accounts be calculated as “incurred claims” for the purposes of MLR calculations. This is all very technical, the kind of thing that only actuaries and state insurance regulators usually deal with. It is a level of detailed regulation well beyond anything the federal government has ever done before. The federal government has no expertise or experience in this area. And that is the problem. Apparently, it is Jay Angoff who will make the decision about this issue. There is no process, no appeal, no recourse if he makes a bad or ill-thought decision. Mr. Angoff has an interesting and disturbing history with insurance companies. He hates them. He started out as a Ralph Nader acolyte and then was the insurance commissioner for Missouri for a few years and destroyed the insurance market there, after which he went on to New Jersey and destroyed the insurance market in that state. See Bob Goldberg’s history of Mr. Angoff’s career in the American Spectator. Now that we are solidly down the path of federal control over insurance companies, will we ever be able to go back?
