The Politics of Health Care: Part II

Politico had a story on June 9 about the challenges now facing those who opposed the health-care reform bill and are hoping to make it an issue with the public during the November election. Other issues are taking center stage – the Gulf oil spill, rising Middle East tensions and other legislative efforts including financial-services reform, an extension of some provisions in the stimulus bill and the return of an energy/global warming bill. But perhaps the biggest challenge is that many of the industries who either opposed the bill or had concerns with parts of it must now focus their efforts on implementation.

I talked with Sarah Kliff, the reporter who wrote the story, and made just that point with her. “You have to deal with reality,” I said. “The reality is that the law is the law, and, for companies, it’s in their best interest to make the law work the best for them.”  And for Republicans who are looking to try and take political advantage of the public’s continued lack of comfort with the law, many of the companies who were on their side during the debate are now focusing on its implementation. While repeal may be a talking point for the GOP, there is and will be no real effort to do so between now and the election. Publicly traded companies and those with billions at stake can’t engage in the theoretical – they must focus on what’s real, and what’s real is a fast-moving implementation process with real consequences, especially for the health insurance industry. 

Just one issue demonstrates this point.

Medical Loss Ratio (MLR) is the percentage of premiums that go toward paying medical claims. For the first time, the reform law established hard targets – 80 percent for the individual market and 85 percent for large groups – which insurance companies must meet in order to participate in the health insurance exchanges. The challenge is defining what can be counted in the MLR. The Obama Administration has been very clear that they believe we must change our health-care system from one that is based on an acute care, fee-for-service, procedure-based system to one that better treats and manages chronic illness using a continuum-of-care model that is no longer based on paying for single procedures but rather on the totality of care. The MLR is critical to that transformation, so getting it right is critical not only to achieving this goal, but also to the level of participation of insurance companies in the health exchanges. As the U.S. Department of Health and Human Services considers this definition, there is tremendous pressure by the AMA, hospitals and many advocacy groups on the left to include only the traditional elements of doctor and hospital payments in the MLR. This timeline on finishing this regulation is later this year.

And this is just one of what will be dozens of key regulations and thousands of decisions that will be made in the coming months and years. So as the GOP and others continue the political battle, companies with a direct stake in the new law must focus their efforts on how this bill will work in reality and impact their bottom lines.