Better Use of the Money

You may recall receiving a letter from your insurance company last year. One of the reforms that were part of the Affordable Care Act was a rule known as the 80/20 rule or the Medical Loss Ratio (MLR) rule. Under the MLR rule, insurance companies had to notify customers if less than 80 percent of revenues were spent on health care expenditures. There was a 20 percent cap on administrative costs, executive bonuses and profits. If the insurance company had spent less than that amount, they had to refund the difference to the customers.

This year, however, that might not happen.

According to a document released by HHS late Friday, the administration is proposing changing the rule and effectively doing away with this provision for now, ostensibly to allow insurers to make up costs incurred during the glitchy Obamacare rollout. In a letter to Secretary Kathleen Sebelius, Tennessee Republican Rep. Diane Black wrote that the change may very well allow insurance companies to spend less on actual care, and keep the extra profits that they make.

There is a better thing that can be done with those profits.

A recent Associated Press story highlighted some of the unintended negative consequences of Obamacare. In a survey done by the AP of dedicated cancer facilities across the U.S., only four out of the 19 nationally-recognized comprehensive cancer centers surveyed said that they were participating providers in all the plans that were being sold on their state’s exchange. In other words, for customers who buy their plans through the individual market, close to 80 percent of cancer hospitals may not be covered in those plans.

In a place like New York, that includes hospitals like Memorial Sloan Kettering Cancer Center, which is included in only some of the plans that can be purchased directly through the government-run website.

Compounding this problem is the fact that it isn’t always easy for consumers to tell whether or not these hospitals are covered in the plans they are choosing. It also is not helpful that, according to a McKinsey Center for U.S. Health System Reform report, 70 percent of the plans being sold on the exchanges are either “narrow” or “ultra-narrow” products, which means that they include less than 70 percent of the local hospitals in their networks of coverage.

This problem got some attention in January, when Senator Tom Coburn (R-OK), himself a cancer patient, revealed that his oncologist was no longer included in the plan he had been required to enroll in as a member of Congress from the exchange.

Coburn said that he will continue to see his doctor; he will just have to pay for his visits and treatment out of pocket. For most Americans, however, this is not an option, as the costs of self-funding cancer care are quite prohibitive.

This is not just a problem with the exchanges, although it is easier to get a hospital in the network of a plan bought privately. The problem then becomes how much more that plan will cost, and what treatments will be covered.

Experts say that the reason this is happening is because insurers can no longer use the methods they have been accustomed to employing to keep their business profitable, and keep the premium prices at a manageable level. These measures, such as cost sharing, underwriting risk, adjusting premiums and benefits and lifetime limits, have now been made illegal, along with denying coverage to those with preexisting conditions. And while those are all reasons for cancer patients to be positive about the law, it is also what is responsible for the narrowness of the products.

Narrowing the network of coverage is one of the only things the insurance companies have left to make their products lucrative for them and their shareholders. That is also the reason why many plans have seen rising deductibles and a drop in what portion of a provider’s bill the insurer will pay out for coinsurance.

The administration, for their part, has said that they had notified the insurers that they will be scrutinizing plans more closely in the coming year, especially in regard to cancer-care coverage. But short of the government taking over the health-care system for these patients (and consistently losing money doing it), there doesn’t seem to be a way to provide these people with the low-cost coverage that they really need.

Until now.

According to HHS spokeswoman Joanne Peters, the 80/20 rule has been responsible for nearly $5 billion in health- care savings since its inception. And since the department is willing to relax the rule to allow insurance companies to make up for added cost, why not do away with the refund part of the program in its entirety, and dedicate these savings to providing better care for the most vulnerable among us?

Cancer care has come a long way in recent years. Studies have shown that the newer, more expensive cancer medications actually have a direct link to lower hospital admissions for inpatient cancer care, which is of a direct benefit to the insurers who will not have to cover that. Dedicating the profits over the 20 percent mark to providing better, more effective care to cancer patients allows for a much higher return on investment than a possible refund of around $100 at the end of the year.

And it may just end up saving lives as well.

This article appeared in print on page 10 of the March 20th, 2014 edition of Hamodia.