Preface: In the interest of breaking through the current 'Kill Bill' vs 'Save & Improve Bill' deadlock here on DKos- I am doing a nooks-and-cranny exploration of the HCR Bill. Hopefully this will refocus our energies and advance the debate beyond the current logjam.
One favorite punch among mexican boxers is a short, upwards punch aimed at just below the right rib cage. A lot of times a casual spectator might not even see this punch landing except on replay. Just as often, the recipient of said punch would'nt feel its effects until a good 10 seconds later- when he doubles over onto the canvas.
Likewise, when Senator Reid (a former prizefighter incidentally) sealed the deal with Senators Lieberman and Nelson on the "Managers' Amendment" two days ago, most observers caught the change in the loss ratio cap from 80%/75% to 85%/80% (itself a great upset victory). Very few have noticed the KO punch that followed though. You see- in this case it's not what's in the Managers' Amendment. It's what's NOT in the Managers' Amendment that landed the naaaasty left hook to AHIP's tender ribs.
Let's begin by revisiting the original SEC. 2718 in the Senate Bill:
SEC. 2718(b)(1)
.....
[cap for non-reimbursement costs]
(A)with respect to a health insurance issuer offering coverage in the group market, 20 percent, or such lower percentage as a State may by regulation determine; or
(B) with respect to a health insurance issuer offering coverage in the individual market, 25 percent, or such lower percentage as a State may by regulation determine
....
SEC. 2718(b)(3)
TERMINATION.—The provisions of this subsection shall have no force or effect after December 31, 2013.
In summary- the original senate bill set the loss ratio at 80% for group policies and 75% for individual policies, and inexplicably lets this limitation sunset (ie. expire) after 2013. By the way, this sunset clause was also found in the House Bill.
Now let's have a look at the latest Managers' amendment:
p.7:
(f) Section 2718 of the Public Health Service Act,
18 as added by section 1001(5), is amended to read as follows:
The wording here is important- note that it is replacing the entire SEC. 2718, and not just inserting texts into the existing section. Read on for the new SEC. 2718:
SEC. 2718(b)(1)(A)
[loss ratio limitations]
(i) with respect to a health insurance issuer offering coverage in the large group market, 85 percent, or such higher percentage as a State may by regulation determine; or
(ii) with respect to a health insurance issuer offering coverage in the small group market or in the individual market, 80 percent, or such higher percentage as a State may by regulation determine
....
SEC. 2718(b)(1)(B)
(ii) CALCULATION BASED ON AVERAGE RATIO.—Beginning on January 1, 2014, the determination made under sub paragraph (A) for the year involved shall be based on the averages of the premiums expended on the costs described in such subparagraph and total premium revenue for each of the previous 3 years for the plan.
....
There are more provisions on definitions, enforcement, rebate mechanism, etc, etc. But as I said- what's important is what is NOT there- there is absolutely no trace left of the earlier sunset clause! There is a new clause which stipulates that the calculation of loss ratio after Jan 1 2014 will be a time average of 3 years. This is a fair and reasonable change. As we all know from the financial collapse of 2008- there can be 'systemic risks' that pop up from time to time. For example- if a serious swine flu sickens millions across the US one year- health insurers could take a bath that year. They would have to raise rates the next year to recoop the loss. Their loss ratio would be higher than expected during the flu year, and lower than expected the following year.
Before we break out the champagne and celebrate, we should keep in mind that nothing is final and everything remains negotiable heading into conference. Now that you all know what to look for on SEC. 2718 though- we can all keep a vigilant eye on the conference bill to make sure nobody tries to take away this hard fought, hard-won, if little noticed victory.
******* Thank you Rescue Rangers! Yer the best! ***********