The howling Left had another freakout today about something the Obama administration did six months ago. This phenomenon is also known as "a day in which the sun rises in the east." The total freakout this time stemmed from a February announcement by the Departments implementing the Affordable Care Act that for small group plans meeting certain conditions only, the ACA's requirement to impose an out-of-pocket maximum will be relaxed only for the first year. Here's an excerpt from the New York Times report:
The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014.The Holy Bible of the Tabloid Left, the Huffington Post, promptly branded this a "setback" for Obamacare. A highly acclaimed diary on Daily Kos tells us how much of a (p)outrage this is that Obama is trying to help insurance companies and employers instead of helping the people who really need help - the uninsured. OMG! So scary! Obama is doing what? He is letting the insurance companies and the richy rich employers off the hook again!
Except that this is a temporary rule designed to help small business while protecting consumers, not insurance companies. The White House, in a blog post just hours ago, clarified exactly what was happening with that rulemaking:
First, this does not affect anyone purchasing insurance through the ACA exchanges. Any plans sold on those (and any individual plans sold) still have to abide by the out-of-pocket maximums at $6,350 for individuals and $12,700 for families (lower for lower income people). All the screaming about how Obama is throwing the neediest under the bus is absolute garbage and has no connection to reality whatsoever.
Second, this one-year so-called "grace period" only applies to small group plans (i.e. small businesses offering plans to their employees) that right now have different separate benefit administrators for different parts of their plans - like one for medical coverage and another for prescription drug coverage, for example. In those instances they may satisfy the requirement, for 2014 only, and only if:
The plan complies with the requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage); andThe rule notes that this separation does not apply to mental health, under mental health parity. It is here that the freakout is being originated. The argument is that letting insurers or administrators of these small group plans separate the limits will cost beneficiaries in higher out-of-pocket potentials.
To the extent the plan or any health insurance coverage includes an out-of-pocket maximum on coverage that does not consist solely of major medical coverage (for example, if a separate out-of-pocket maximum applies with respect to prescription drug coverage), such out-of-pocket maximum does not exceed the dollar amounts set forth in section 1302(c)(1).
Well, won't it? At least for a year?
Not unless you have the worst case of tunnel vision, ever. The problem remains the same for Health Reform opponents (who are now suddenly screaming that it's not being implemented fast enough): they fail to see the comprehensive nature of reform. It is in this comprehensive nature of reform that will stop insurance companies from abusing the process and gauging consumers. Let's see how.
Narrow relief: The administration is not trying to cut insurance companies a slack; they are trying to give small businesses a break. Remember that small businesses aren't required to provide insurance to their employees at all. But the ones that do have asked for more time to comply with this specific requirement, so the administration is giving it to them. Hence, the scope of this is so narrow - only to small group plans that use more than one administrator.
Medical Loss Ratio Requirements: There are a few other crucial components of comprehensive reform that goes ignored by the hair-on-fire crowd. One is the current requirement under the ACA that insurance companies that provide insurance to the small group market spend at least 80% of their premium revenue actually paying for health care. Insurance companies aren't exactly left with big incentives to make you pay for a ton of your expenses if they have to end up cutting a check at the end of the year.
Exchanges as Alternatives: Two, the means-test under which someone qualifies for the exchanges (which, I again point out are not subject to this delay) does not change. If employer provided insurance is too expensive (premiums costs more than 9.5% of one's annual income) or doesn't meet minimum value requirements (covering at least 60% of expenses for a standard population) are eligible for premium subsidies in the insurance exchanges. Make small employer insurance prohibitively expensive (either in premiums or in out-of-pocket costs) and the exchanges will pick up the people who would otherwise fall through the cracks, and impose tougher requirements on the insurance companies anyway.
Federal government negotiating for small business: If small businesses themselves find dealing with insurance companies too much of a hassle, they can head for the Small Business Health Options Program (SHOP), an ACA created and federally administered program that simplifies the buying for them by pre-negotiating good plans they can choose. Health insurance companies may want to screw their customers, but I guarantee you that the vast majority of small businesses need their employees to be healthy and want the best plan for them. In fact, at least part of the purpose of this 'relief' may well be to drive small businesses into the SHOP program.
Let's recap quickly. With this change:
- Nothing changes for the exchanges or the Medicaid coverage. In fact, if small groups abuse this, they will drive more people into the exchanges (which, for progressives, should be a good thing). The most vulnerable - people who do not have employer coverage or are too poor to afford it - are still taken care of.
- Small businesses get additional time to figure out their benefits while still providing coverage to their employees - and perhaps decide to go to the federal SHOP system for their needs.
- Insurance abuses are prevented by providing alternatives for both individuals and small employers.