PPACA Package To Lead To Intense Regulatory Scrutiny

Insuring Resources Commentary:

As President Obama has reiterated throughout this process, ad nauseum at times, the insurance companies no longer have a free ride. Or at least in paraphrasing-- he has used language like that. And perhaps its true, not in Wisconsin, but perhaps for most of the country. In Wisconsin, I'd bet that little will change comparatively. Through our insurers and our Medicaid program we'll still cover more residents than almost every other state and we'll still regulate insurers like its a matter of life and death, because here it always has been serious business. In Wisconsin we'll continue to have insurers and providers push the envelope toward better quality and efficient care, because, that's what we do.

So bring on the scrutiny, Wisconsin will continue to excel and we'll continue to light the way for states like Alabama, Louisiana, and Georgia. Regulators, the state Medicaid programs, and domiciled insurers alike are scared stiff in the South, and they should be. Ever wonder why they are screaming and suing the federal gov't saying this federal health reform and the individual mandate are unconstitutional? Because down there insurance regulations and Medicaid coverage are virtually non-existent. The PPACA ends that and starts an era of accountability.


But yes, I agree with Milliman and their analysis that follows below. Scrutiny is going to be intense and is yet another reason I'm upset with Wisconsin's Congressional delegation. Now, Rep. Ron Kind (D-LaCrosse) and Sen. Herb Kohl have tried to add a Wisconsin flavor to health care reform. For the most part, I believe, they tried diligently but failed to convince their colleagues. Congress had a chance to expand our quality and efficient care processes nationwide, but didn't.

Sen. Feingold, Rep's. Baldwin, Obey, Petri, Sensenbrenner, Kagen and Moore were virtually non-existent in the debate and ideas process. Rep. Ryan in contrast has plenty of ideas and has provided a thoughtful counter proposal to the process. Although I disagree with most of Ryan's HSA and tax credit ideas I applaud his effort.

As for the Milliman analysis below I've highlighted in bold the portions I want you to pay the most attention to...... but again we're way ahead of the game.

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Milliman: Expect The PPACA Package To Lead To Intense Regulatory Scrutiny



The health insurance industry will face intense regulatory scrutiny due to the new Patient Protection and Affordable Care Act and its companion, the Health Care and Education Reconciliation Act of 2010, according to Milliman Inc.

PPACA was created by H.R. 3590 and HCERA, which was signed into law today, was created by H.R. 4872.

“While new regulation does not necessarily go into effect immediately, it is clear that health insurers now face increased scrutiny and a new layer of regulatory complexity,” researchers at Milliman, Seattle, write in an analysis of the new laws. “Health plans will have to focus on minimum loss ratios and administrative efficiency and will have to balance challenging cost dynamics against the need for affordable policies.”

PPACA would create a new system of health insurance exchanges that would help individuals and small businesses buy subsidized, standardized packages of health benefits. The new exchanges will change the level competition, the researchers say. The effects will be different in each state, and they may include reduction of distribution costs and potentially tempering of rate increases in the individual and small group insurance markets, the researchers add.

Also, due to an influx of an estimated 30 plus million new people into the insurance and Medicaid markets, “insurers will face unique pricing and risk-mix challenges,” the researchers write.

Some of the other considerations the researchers have identified:

- Cost effectiveness will be central, as in provider risk-sharing methods and evidence-based medicine. However, the researchers also note that “a new emphasis on prevention has uncertain cost implications.”

- New requirements—such as minimum loss ratios for insurers and the new tax on health insurers that sell relatively expensive "Cadillac plans," which is set to take effect in 2018--will affect plan design.

- Medicare Advantage plans will become less attractive to consumers and carriers, and the plans will face difficult questions about efficiency and benefits mix.

- Enterprise risk management will become essential.

- Strategic considerations will be influenced by local dynamics, including geographic cost variation and the existing regulatory environment in each state.