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Posted at 3:36 PM ET, 01/14/2011

Regulations, not repeal votes, will decide the future of the health-care law

By Ezra Klein

The repeal vote on the floor of the House isn't even close to the most important thing happening to the health-care law right now. For that, you'd need to look across town, to where the Institute of Medicine is discussing how the secretary of Health and Human Services should define the term "essential health benefits."

This is the judgment that underlies the whole project. If you're an individual and you have coverage that meets essential health benefits, you don't need to worry about the individual mandate. If you're a mid-sized company and you offer coverage that meets the definition, you're similarly in the clear. But if you don't have coverage that's good enough, you either need to buy it, or upgrade what you've got. Everything the insurers offer in the exchanges has to be as good as or better than whatever counts as essential health benefits. Everything that mid-sized employers offer has to meet the standard, too. The question is, what's the standard?

If you've read Section 1302 of the legislation -- and you have, right? -- it'd be easy to think that benefits had been defined. And they have -- sort of. The legislation mentions nine specific categories of care that have to be included (pediatric, hospital, etc.), and specifies different levels of comprehensiveness (as defined by the percentage of annual health-care costs the policy is expected to cover) that the exchanges will offer. But those elements give shape to the discussion over essential health benefits, they don't conclude it. The same paragraph that ticks off those categories also instructs that "the Secretary shall define the essential health benefits."

The question is how specific you want to go in trying to protect people from insurance products designed to fail them at moment of maximum need and expense. As Sara Rosenbaum, Chair of the Department of Health Policy and Health Services at George Washington University, says, "insurers have all kinds of ways to discriminate against people who have serious health conditions once they're covered by watering down their benefits." The fact that insurers can't turn you away for preexisting conditions doesn't mean they can't design clever plans that make it harder for you to get coverage if you develop a serious condition. "An example is a woman with multiple sclerosis who needs certain therapies to keep her functioning," continues Rosenbaum, "but is told she won’t be covered because she won't 'improve.’ " The legislation doesn't necessarily disallow that now. Should the regulations?

The problem is that as you get more specific with the regulations, you cut off space for innovation in insurance design, make policies pricier, and write more existing insurance products out of compliance. And as Jon Gruber, a health economist at MIT, argued before the panel, Section 1302 "is already a much broader mandate than was ever in place in U.S." Maybe that's enough.

It's a hard question, but I side with the "less-is-more" crowd -- at least for now. Regulations can be toughened and tightened at a later date by either this Secretary of Health and Human Services or one of her successors. But make them too tough or too tight at the start and you'll cause a lot of needless disruption and perhaps disallow some products that would've worked out unexpectedly well. The good thing about giving regulators a lot of power and discretion going forward is that they don't have to use too much of it now.

By Ezra Klein  | January 14, 2011; 3:36 PM ET
Categories:  Health Reform  
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Comments

Legislators should get whatever the minimum benefit is.

Posted by: will12 | January 14, 2011 4:14 PM | Report abuse

Ezra, my understanding was that grandfathered plans did not have to provide the "essential health benefits."

Posted by: jfung79 | January 14, 2011 4:56 PM | Report abuse

Ezra wrote, "If you're an individual and you have coverage that meets essential health benefits, you don't need to worry about the individual mandate."

Nope.

The individual responsibility provision says that an individual must maintain "minimum essential coverage." [Section 1501 of PPACA, adding Sec. 5000A of the Internal Revenue Code.] There's a whole laundry list of plans that meet the definition of "minimum essential coverage," including a grandfathered plan.

"Essential health benefits" are those that need to be included in a "qualified health plan" sold in (or outside of) the Exchanges. [Section 1302(b) of PPACA]

This is perhaps an example of how complex this bill is.

Posted by: Policywonk14 | January 14, 2011 5:38 PM | Report abuse

It's true that if you are outside of Virginia and "don't have coverage that's good enough [as defined by unelected bureaucrats who have, to date, favored businesses and individuals who financially support a particular political party], you either need to buy it, or upgrade what you've got."

It's also true that "Regulations can be toughened and tightened at a later date by either this Secretary of Health and Human Services or one of her successors" -- the power of financial and physical life and death is now in the hands of unelected bureaucrats. Go against The Regime and you'll fail to get a waiver: support The Regime and you can keep your income... and your life.

Finally, it's certainly true that "as Jon Gruber, a [lobbyist paid by the Obama/Pelosi Regime] argued before the panel, Section 1302 'is already a much broader mandate than was ever in place in U.S'." Few would argue that the PPACA is the broadest, most invasive tax statute ever levied by Congress on hard-working middle class Americans citizens. [NB: Illegal aliens are specifically exempt from the individual mandate.]

Are these good things? That is, is it at all possible that regulatory power can be abused? Of course, regulatory power can -- and historically has -- been used to persecute political foes and to hide fact from the public. If the errors of the Obama/Pelosi PPACA are not remedied or repealed, the secrecy and the persecution will continue and blossom: it's a certainty underscored by the very points presented in Klein's post.

Posted by: rmgregory | January 14, 2011 7:17 PM | Report abuse

One way to cut thru this regulatory knot is to require health insurance profiteers to pay for ALL medical expenses. Instead of the above discussion, we would be talking about how to PREVENT illness.

Posted by: joelgingery1 | January 14, 2011 8:01 PM | Report abuse

One way to cut thru this regulatory knot is to require health insurance profiteers to pay for ALL medical expenses. Instead of the above discussion, we would be talking about how to PREVENT illness.

Posted by: joelgingery1 | January 14, 2011 8:02 PM | Report abuse

Ezra, I have to disagree with you on this one. The EHBP needs to be as specific as possible, not only to prevent exploitation of the rules, but more importantly, to give both insurors and the insured some specificity as to what is actually covered.

I know it seems like 1302 is pretty straightforward, but as statutory framework it is horribly inadequate. First of all, the staute does not rely on words used to describe benefit packages in other statutes like Medicaid. So legal interpreters don't know if these terms are supposed to be synonymous with those other words or if they are purposefully different. I think part of the problem is that this staute was drafted as a placeholder, with the intent to change it to better, more historical language in conference committee. Unfortunately, Congress never got the chance so we are stuck with these odd words. Not odd in common medical discussion, but odd in their lack of legal definition.

Also, again borrowing from Medicaid, federal programs have tons of regulatory specificity. This may seem onerous, maybe it is, but it is also important, especially if you are a beneficiary who believes that covered services are being denied.

Lastly, limited regulation does not put more power and flexibility into the hands of insurors. Instead, it makes courts and judicial interpetation extremely powerful. If the regulators don't decide, the courts will. Any grey area will be filled in with reems of differing legal opinions in different jurisdictions.

The best thing to do is to have precise clear regulatory language that lays out in no uncertain terms the exact intent of the statute.

Posted by: jdpourciau | January 14, 2011 10:50 PM | Report abuse

If you're smart, you're paying for as much of your health care as you can out-of-pocket. If you're prudent you're using insurance sanely as a hedge against unforeseen risk, and not as an inefficient means of financing regular health care. You're paying the insurance companies as little as possible and covering unexpected calamities via low-cost, high-deductible, catastrophic insurance. And for all this, you will be punished.

The insurance industry wrote this bill as a stop-loss measure to address the hoards of us just beginning to figure out that the traditional group insurance plan is little more than a glorified Ponzi scheme. They've seen the writing on the wall and come to the conclusion that the only way to keep us all herded into their pens is through force of law. It's pure corporatism in action.

Posted by: dblack2 | January 15, 2011 12:44 AM | Report abuse

Congratulations on a sharing successful. I follow the success captions.

Posted by: seslisohbet | January 15, 2011 7:04 AM | Report abuse

Everybody wants candy, for free. The problem is, the people that are working on you while you're in the ER, or the operating room have more education in their pinky finger than all of you put together. "Entitlement Ideology". This comes from mommy and daddy paying for your insurance, but you don't want pay jack. Giving 1/6 of our economy to one department flunky, who only answers to the president, sounds good to you. Already, this law hasbeen walked-back with exemptions to certain companies and unions. The CMS director is in love with the UK system, death panels and all. The CBO scores crap that gets fed to it, and you hold it up as gospel. Here's a fact: doctors that have money, are running away.
And, they're telling their kids not to go into medicine. To go write for The Post, because it pays better, and there's no responsibility for spinning facts. The Proof: Krauthammer. If and when we get to your Utopia, and you need medical services, they'll just hand you a scapal and a towel with "Welcome to free healthcare" on it. Here's a tip: Get gold teeth, incase you get into an accident, doctors will open you mouth to get paid, before they save your life. Why-not talk to a hospital administrator, and find out how CMS negotiates with them versus insurance carriers. How a hospital has to make up difference that CMS doesn't pay. Get away from your computer and talk to actual professionals. You may get mistaken for an actual "journalist"....heaven forbid.

Posted by: reality14 | January 16, 2011 6:32 AM | Report abuse

Everybody wants candy, for free. The problem is, the people that are working on you while you're in the ER, or the operating room have more education in their pinky finger than all of you put together. "Entitlement Ideology". This comes from mommy and daddy paying for your insurance, but you don't want pay jack. Giving 1/6 of our economy to one department flunky, who only answers to the president, sounds good to you. Already, this law hasbeen walked-back with exemptions to certain companies and unions. The CMS director is in love with the UK system, death panels and all. The CBO scores crap that gets fed to it, and you hold it up as gospel. Here's a fact: doctors that have money, are running away.
And, they're telling their kids not to go into medicine. To go write for The Post, because it pays better, and there's no responsibility for spinning facts. The Proof: Krauthammer. If and when we get to your Utopia, and you need medical services, they'll just hand you a scapal and a towel with "Welcome to free healthcare" on it. Here's a tip: Get gold teeth, incase you get into an accident, doctors will open your mouth to get paid, before they save your life. Why-not talk to a hospital administrator, and find out how CMS negotiates with them versus insurance carriers. How a hospital has to make up the difference that CMS doesn't pay. Get away from your computer and talk to actual professionals. You may get mistaken for an actual "journalist"...."heaven forbid".

Posted by: reality14 | January 16, 2011 6:42 AM | Report abuse

and that same NHS system is under attack from within. I'd love to get your take on this Ezra.

http://www.bbc.co.uk/news/10557996


Not only does this (and other stories around Europe) confirm that the NHS will now no longer (because of cost) cover many elective procedures they also purposefully and intentionally increase wait times to delay paying for things.

Kind of a poor model to want to emulate, no?

Posted by: visionbrkr | January 17, 2011 9:44 AM | Report abuse

If I ran a doctor's group or insurance plan, here's what I would do (for the DC area as an example). I'd pick a small number of very high cost treatments (heart by-pass, or cancer treatments, or whatever else you think is a good example). Then I'd advertise, "these treatments are covered under our policy at our state-of-the-art facility in Hagarstown, MD" (or some other city 100 miles or so from DC center. Then, I'd give all my participating doctors the names of insurance companies who covered the same treatment in DC area hospitals. Anytime an insured patient was diagnosed as needing one of these treatments, the doctor would say: "Yes your insurance covers this treatment, but you need to go to Hagarstown. Or, if you prefer, you can change your insurance to any of these other companies who cover the treatment at GW, or G'town, or Childrens hospitals."

The general problems with government regulations is that they create loopholes. The loopholes either undermine the effectiveness of the regulation, or they lead to ever more complex regulations. ("Coverage is defined to mean coverage at a facility meeting thus and so quality requirements, at a distance no more than thus and so from somewhere.")

Posted by: mnorris1911 | January 18, 2011 12:58 PM | Report abuse

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