Health Law and Policy Update
Headlines of the week
NAIC approves consumer-friendly recommendation on medical expenses
The National Association of Insurance Commissioners (NAIC) on Thursday voted to recommend a relatively narrow definition of medical spending as part of federal health care reform, dealing a victory to health consumer advocates.
NAIC members rejected amendments to the recommendation advanced by health insurance companies that would have broadened the definition of medical expenses, known as the medical loss ratio. The Affordable Care Act says health plans must spend at least 80 percent of revenue on direct medical care, while the rest can go to items such as salaries and profits.
NAIC members include insurance officials from the states, including Colorado Insurance Commissioner Marcy Morrison. A panel of consumer representatives that advised the state officials includes Barbara Yondorf, a Colorado-based health policy consultant. Now the recommendation goes to Health and Human Services Secretary Kathleen Sebelius for final approval.
Among the amendments NAIC rejected, according to Kaiser Health News: "One would have allowed insurers to deduct broker commissions, another would have allowed them to average their medical spending nationwide, rather than state-by-state, and the third would have loosened a complex 'credibility adjustment' formula to allow many insurers, particularly smaller ones, to hit the medical spending targets, even if they don't spend 80 percent on medical care."
Former health insurance executive Wendell Potter reviewed the issues in a piece on the Huffington Post website.
Coloradans speak out against Amendment 63
The campaign opposing Amendment 63 issued a news release Thursday highlighting the experiences of several Coloradans who oppose the measure. Among those featured in the release:
Denver resident Mona said: "The way I see it, if Amendment 63 were to pass, people with insurance would be mandated to pay for those without, and the costs will skyrocket. I can't afford to pay more."
Dr. Jim Shmerling, CEO of The Children's Hospital, said: "No one knows all of the negative impacts Amendment 63's vague language could have on health care in Colorado. What we do know is that Amendment 63's sweeping terms will have real consequences."
The release generated some media coverage including in the Denver Daily News. The release noted the Colorado Center on Law and Policy's analysis of Amendment 63. Shorter and longer versions of the analysis are available on CCLP's website.
Advancing the debate
Why states cannot preempt federal law
In the debate surrounding Amendment 63, some participants hold a basic misunderstanding about what the proposed state constitutional amendment can and cannot do. Amendment 63 cannot prohibit the implementation of federal health reform in the state of Colorado. The Supremacy Clause of the U.S. Constitution (Article VI, clause 2) states, "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding."
That means any federal law Congress passes authorized by the U.S. Constitution preempts any state law that might interfere with it. When passing a new law, Congress will sometimes state its intent to preempt state law. Otherwise, there are two ways for Congress to implicitly preempt state law. First, the federal law might so completely occupy the field that there is no room for state law to operate. Second, state law might directly conflict with federal law, in which case federal law prevails.
The constitutionality of the Affordable Care Act's individual mandate to purchase health insurance is being challenged in federal court cases across the country, with opponents arguing Congress was not authorized under the U.S. Constitution to create the mandate. If it is determined to be unconstitutional by the federal courts, then it will be the federal courts, not Amendment 63, that invalidate federal health reform's individual mandate provision. Amendment 63 can only prevent the state of Colorado from ever adopting its own individual mandate if the federal individual mandate is no longer possible.
Colorado's own bipartisan Blue Ribbon Commission on Health Care Reform included an individual mandate in its recommendations for reforming health care in Colorado.
The absence of an individual mandate as part of health reform would hugely destabilize the insurance market in Colorado and quite possibly result in large increases to the cost of health insurance. Widely popular changes to private insurance practices such as requiring insurance companies to sell insurance to people with pre-existing health conditions, that better protect consumers and make insurance coverage more accessible and affordable, would be threatened. Those types of changes cannot be implemented successfully without a requirement for all consumers to participate in the market. Without the individual mandate, the likely pool of consumers will be heavily weighted toward older, sicker consumers who are also more costly because many younger, healthier consumers might put off purchasing coverage until they become injured or ill. The individual mandate is designed to create a larger pool of consumers where everyone pays a fair share for coverage.
Federal health reform largely matches Colorado's commission recommendation
How does the federal health care reform law, the Affordable Care Act, compare with the recommendations of Colorado's own Blue Ribbon Commission on Health Care Reform?
The Colorado Trust recently published an issue brief outlining the differences and similarities. The similarities are greater than differences. For example, both call for:
- A mandate for all citizens and legal residents to carry health insurance
- Incentives for employers and employees to buy health insurance
- Creation of a health insurance exchange to "clear" insurer offerings
- Reform of mechanisms to pay health care providers
- Incentives to reform health care delivery to make it less costly or more effective
- Expansion of public subsidies by expanding eligibility for Medicaid and Child Health Plan Plus
The Colorado Trust discussed its report in a Thursday commentary on The Denver Post's website.
Health Care Director
Health Care Attorney
Released Oct. 22, 2010