The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Legislative Intent and Health Care Reform

Posted by Alan on August 13, 2010


The meaning and intent of legislation is often in the eye of the beholder. That’s why they invented courts. And the courts are where the interpretation of the medical loss ratio provisions in the Patient Protection and Affordable Care Act are likely to wind up. What will make such suits especially interesting is that the new health care reform bill wasn’t passed by Congress in the usual way. As a result, statements of legislative intent are lacking.

The usual route of legislation is through a Congressional conference committee in which differences between the House and Senate versions of the bill are ironed out – and where formal statements of intent are drafted, debated and published. The path of health care reform was different. The legislation was headed for a conference committee when, in Senator Scott Brown, a Republican, was elected from Massachusetts. This gave the GOP caucus, if they stayed united, the votes needed to block any bill from coming to the floor. And on the PPACA, Republicans were united in their opposition. Democratic leaders worked around this legislative roadblock by having the Senate pass the House legislation (HR 3590) and then both chambers passing a reconciliation bill (HR 4872). This allowed Democrats to pass health care reform with a majority vote instead of the super-majority which would have been required had the legislation gone the more traditional route.

But now the Department of Health and Human Services has to promulgate regulations that implement the medical loss ratio provisions of the new health care reform law. These are the provisions that require individual and small group carriers to spend 80 percent of the premium they take in on claims and health quality expenditures (large group policies have to spend 85 percent of premium on these costs). What goes into the calculation of this percentage will determine the impact of this part of the law.

American Health Line is reporting that Democratic lawmakers are providing advice to the Secretary of HHS that, according to health plans, is reinterpreting the letter of the law. (The story was originally published by Politico). The issue is ostensibly about how certain taxes will be treated in calculating a carriers medical loss ratio. What’s interesting, however, is the attempt by the Congressional Democrats to provide legislative intent after the fact and outside the normal process for doing so.

What this points out is that unintended consequences occur not just in the content of the law, but from how the law is passed.

4 Responses to “Legislative Intent and Health Care Reform”

  1. One minor correction. It does not change your ultimate point (I am anal retentive about history) but it was the House that passed the Senate version of Obamacare on March 22 and not the Senate passing the House bill. With the election of Scott Brown, that would have been impossible.

    Ironically, Ben Nelson of Nebraska was given special treatment earlier by Reid in order to buy his vote. Hence, “The Nebraska Purchase” In news interviews afterwards he claimed he wanted the offending language removed from the bill. However, he was one of 6 Democrats who voted against reconcilliation that removed the Nebraska pork.

  2. Ed from Pa said

    Advertising costs, broker’s compensation and many other odds and ends are going to heavily impact the 80% number. I assume there will be some type of compromise. Otherwise, look for many of the carriers to pull out of the individual market.

    • Ed, some already are. Unicare withdrew from Texas in December and from Michigan last month. I got notice from Aetna in Texas that they were joining Cigna and withdrawing from the child only market. I have to find an income stream other than just individual health insurance.

  3. JimK said

    Congressional intent is usuually determined by the Congressional Record and I think any attempt to redefine congressional intent after fact is doomed to failure. Put it another way, the democrats are trying to say that they did not mean what they said “on the record.”
    This plus the fact that the Bill was extraordinarily long leaves little room for a regulator to fill in all of the blanks.

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