You can tell people whatever you want if they cannot understand it anyway

November 22nd, 2012 | Uncategorized

As I indicated in my last post, I continue to search the two new sets of regulations on Essential Health Benefits and Insurance Rules. There are, in fact, some factual surprises and at least one that benefits the states with the most “progressive” insurance rating rules and mandated benefits, in sharp contrast to the rest of the ACA that requires those benefit-rich states to fund Medicaid plans out of pocket while other states got a free ride from the feds, and disproportionately taxes those states (e.g., Massachusetts, New York, New Jersey, Connecticut) to pay for the cost of Reform. That Surprise is that the feds will pay for the cost of  mandated benefits imposed by the state that exceed the ACA definition of Essential Health Benefits if those mandates were in place on or before December 31, 2011. Thus, things like In Vitro Fertilization, podiatric services, low protein foods, wigs and more importantly the scope of such coverage will be eligible for federal subsidies when purchased through an Exchange. One can be reasonably certain that this was NOT priced in by the CBO in its cost estimates for the ACA, which are understated in any event.

I once asked a family member who is a brilliant scientist to explain Maxwell’s equations of light to me. She obliged, but I must confess I do not understand them sufficiently and thus it would be very difficult for me to challenge someone’s analysis of same or to debate their applicability in a particular circumstance. Here is an example of that from the insurance market regulations taken from Table V.1, called an Accounting Table – apparently by an actuary who did not know what Accounting meant:

“Transfers:
Qualitative:
* Lower rates for individuals in the individual and small group market who are older and/or in relatively poor health, and women; and potentially higher rates for some young men which will be mitigated by provisions such as premium tax credits, risk stabilization programs, access to catastrophic plans, and the minimum coverage provision.”

I think what they are telling us here is that there might NOT be a free lunch and that young men will have to pick up any unpaid check. Well, that is the gentlemanly thing to do, I guess.

Here is a quote from another such Accounting Table (IV.1) in the Essential Health Benefit regulations and its introduction:

“The approach to defining AV [that is Actuarial Value in regulation-speak] in this proposed rule uses standard assumptions about utilization and prices, and, for most products, directs issuers to use an AV calculator created by the Department to compute AV. This approach will ensure that two plans with the same cost-sharing parameters (that is, deductibles, copayments, and coinsurance features) will have the same AVs. This approach is intended to lower consumer information costs and drive competition in the market by enabling consumers to easily compare the relative generosity of plans, knowing that the AV of each plan has been calculated in the same manner.”

Consumers are going to understand AV? Me thinks not, if anything, they are likely to think it means Audio-Visual, like the Club when you were in High School. Does insurance pay for a 70 inch flat-screen with 3-D?

“(2) Costs due to higher service utilization. As consumers gain additional coverage for benefits that previously did not meet the standards outlined in this proposed rule (for example, pediatric dental or vision coverage), utilization, and thus costs, may increase. A portion of this increased utilization and costs will be economically inefficient, as insurance coverage creates a tendency to overuse health care. Further, there may be incremental costs to consumers associated with greater service utilization.”

Uhhhh, yeah! That is how we got to the place we are at in the first instance! When that Buffet Table line opens up, I’m heading for the lobster tails, king crab legs and filet mignon. Bon Appetit!

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