Obama Administration Waives Health Care Rule to Preserve “Junk” Insurance

Let’s start with the obvious: Price controls create shortages. And the Patient Protection and Affordable Care Act's mandatory medical loss ratio (MLR) provision, which requires health insurers to spend either 80 or 85 percent of their premium revenue on “clinical services” as determined by federal regulators, is a roundabout form of price control. So it wasn’t terribly shocking when the Congressional Budget Office warned that particularly high MLR requirements would be "likely to substantially reduce flexibility in terms of the types, prices, and number of private sellers of health insurance." It's a pretty straightforward concept: When the government controls prices, private firms exit the market or offer fewer products.

Now it seems the federal government has finally caught on to the idea. The Department of Health and Human Services issued a waiver to the state of Maine exempting its individual health insurance market from from the 80-percent spending requirement. Why the special exemption? According to Steve Larsen, the Obama administration’s deputy administrator of the Center for Consumer Information and Insurance Oversight, the rule “has a reasonable likelihood of destabilizing the Maine individual health insurance market.” At least one insurer, HealthMarkets Inc., had threatened to leave the state’s health insurance market entirely, much as the CBO predicted.

HealthMarkets Inc. isn’t what you might think of as a sympathetic cause either; it’s been accused of selling “junk insurance” filled with obscure provisions that make it harder for enrollees to get care. But Maine’s insurance commissioner asked for the waiver anyway, and the Obama administration, after much delay, finally granted it. Apparently, it was more important to keep a so-called “junk insurer” in the market than to enforce the new rules.

After all the other waivers we've seen handed out, it’s not surprising, but it is telling. This is about as straightforward an admission as you’re going to get from the administration that the MLR requirement not only has negative side effects, but has negative side effects that are bad enough that lots of people would be better off without the provision at all.

More on MLR rules here, here, and here.

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  • McDouche||

    I always keep my "junk" insured.

  • rather||

    A no-deductible policy because of lack of use?

  • rather||

    All insurers are in the junk insurance business but they only show you that codicil when your policy is a money loser

  • creech||

    Well, we were warned the bill had to pass to find what was in it. Even the sponsors are now having second thoughts.

  • ||

    Makes you wonder if they really are just a bunch of blithering idiots instead of merely evil. I often can't decide but why would they provide this exemption unless they really were caught off guard by their own stupidity?

  • ||

    Hardly. It gives the administration yet another carrot/stick to ensure good behavior by state governments.

  • ||

    This certainly wasn't well thought out.

    They didn't understand the consequences, and they didn't understand the political fall out either.

    It's pretty standard coming from the Obama Administration too--their financial regulation was poorly thought out as well.

    I think they had good intentions--but if they ended up hurting millions of people, then good intentions don't count for anything.

    Actually, if they had good intentions and ended up hurting the people they were trying to help--that makes it worse. That means they're incompetent.

  • DNS ||

    I think they had good intentions--but if they ended up hurting millions of people, then good intentions don't count for anything.

    Eggs...omelettes.

  • ||

    The omelet's inedible!

    If you want to make an inedible omelet, by all means--treat sick people like eggs and break them?!

    Surely, you don't really mean that.

  • DNS ||

    The omelet's inedible!

    Correct. And this administration knows it, too. Sebilius is on record admitting to double-counting funding numbers for both ObamaCare and Medicaid. I was emphasizing, with sarcasm, that ObamaCare is not about the sick people at all. The administration doesn't care, yet makes every pretense to do so.

    They just want control. Full stop. Everything else is ancillary.

  • ||

    I get it.

    That treating people like eggs to make an omelet argument is the argument they're making.

    It's just that they see that as a good argument. We see it as a crime, but they really do see it as a virtue.

    It's like a cultural difference. In other words, what we're accusing them of--is something they're proud of!

    They see us little libertarians over here treating people's rights like they're precious--and they're proud of the fact that they treat individual's rights like eggs!

    It's hard to shame people who are proud of what they're doing.

  • Gilbert Martin||

    "Makes you wonder if they really are just a bunch of blithering idiots instead of merely evil"

    Those two categories are not mutually exclusive.

  • ||

    How many waivers would they have to issue before it becomes impossible to resist the proposition that the whole thing is irretrievably broken?

    I wonder when someone who is denied a waiver will bring a lawsuit?

  • sevo||

    "How many waivers would they have to issue before it becomes impossible to resist the proposition that the whole thing is irretrievably broken?"

    And what sort of a law is it that the executive can simply say 'it doesn't apply to you and you, but it does apply to you'?
    Do we approach the throne to find out if we're affected?

  • ||

    "How many waivers would they have to issue before it becomes impossible to resist the proposition that the whole thing is irretrievably broken?"

    I was hoping for the outside chance that they can blame the whole thing collapsing on the Supreme Court. The Supreme Court makes a perfect fall guy for that.

    Short of that, I think things really will have to start to crater before there's any resolve to do anything to fix it.

    I think this will be easier to get rid of than Medicare. I think there are all sorts of evil consequences of Medicare--among them, that millions of elderly people have been shipped off to the warehouse because Medicare would pay for that--clear moral hazard.

    ...but in Medicare's case, it was presented as giving elderly people more options. Nursing homes were a choice most poor people didn't have--until Medicare came along.

    ObamaCare is different in that it's supposed virtue is that it restricts people's choices--that's touted as a feature and not a bug! As the hype of what it was supposed to be gives way to reality, and more and more people lose their freedom to choose, I'm hoping the political will to do away with the whole thing will start to materialize--regardless of what the Supreme Court does.

  • BS||

    Another day, another flaw with ObamaCare exposed. Just proves again that ObamaCare is just a power grab by the government, nothing else.

  • Gregory Smith||

    I have a feeling Obamacare is gonna become as complicated as the tax laws, a system that punishes some and rewards others.

    Seriously people, don't reelect this Marxist!

    Michelle Obama's Food Police.
    http://libertarians4freedom.bl.....olice.html

  • Ice Nine||

    >>Why the special exemption? According to Steve Larsen, the Obama administration’s deputy administrator of the Center for Consumer Information and Insurance Oversight, the rule “has a reasonable likelihood of destabilizing the Maine individual health insurance market.”

    Geez, imagine that - we put a tractor tire on the ol' sedan and it up and destabilized that sucker!

  • Evil Libertarian||

    Will all 57 states get waivers now?

  • Sarah Palin||

    What an idiot, even our ally in North Korean knows we have lots and lots less.

  • Paul||

    Your use of poor grammar and spelling was genius.

  • rather ||

    Paul, leave Sarah alone bitch

  • Miso Genius||

    STFU or your next.

  • Paul||

    Obama administration’s deputy administrator of the Center for Consumer Information and Insurance Oversight

    Fuck! We're Europe!

  • WTF||

    Where does the executive get the power to grant exemptions to laws duly passed by congress?

  • Nancy Pelosi||

    Where does the executive get the power to grant exemptions to laws duly passed by congress?

    But we had to pass it to find out what's in it...surprise! Oh, and the funding is already written into it. Bitches.

  • ||

    He's the Decider!

    Fuck, I'm sure he'll be saying that before long. He's followed along in Bush's footsteps on everything else.

  • sevo||

    "Where does the executive get the power to grant exemptions to laws duly passed by congress?"

    I have the same question. Isn't the executive sworn to uphold and enforce the law?
    I don't ever remember any provision allowing choices about to whom the law applies. Especially when the choices seem driven by purely political motives.

  • Vermont Gun Owner||

    Where does the executive get the power to grant exemptions to laws duly passed by congress?

    Presidential Pardon. Completely constitutional (probably the most constitutional thing he's done).

    Also slimey as hell, and strong evidence that the law is FUBAR. If you've got to issue this many exemptions to a law before it's even fully implemented it is clear the law needs to be changed.

    I suppose a preemptive pardon (waiver) could be brought up before the SCOTUS, but I doubt that argument would fly.

  • sevo||

    "Presidential Pardon. Completely constitutional (probably the most constitutional thing he's done)."

    I'm sure no lawyer, but I seem to remember when Nixon was run out of town on a rail, Ford was told you can't issue a pardon without someone being charged and convicted.

  • ||

    The statute gives Sebelius essentially unlimited discretion, including the discretion to issue waivers.

  • ||

    Like much of the awful regulatory legislation excreted by Congress, the health care bill included a provision for HHS to grant waivers for the bill's various provisions. Congress has figured out that if they don't actually write rules into the legislation, just make an empty shell to be filled by the executive branch, they can't be blamed for the ensuing ill effects. It's the AUMF vs. war declaration all over again. "I didn't vote for war, I voted for the president to make the decision."

    And then you get wonderful examples of regulatory perversion like the Obama administration granting a waiver to Mattel from the toy-testing legislation that was passed in response to poisonous Mattel toys.

  • alan||

    At one thousand institutional waivers and counting, the Obama administration is proving to be a more hardcore advocate against the law than anyone on this board. Maybe we can take a pass, prop up our feet and let some official from the executive branch argue with our trolls, explaining why it wont work, instead.

  • DNS||

    At one thousand institutional waivers and counting, the Obama administration is proving to be a more hardcore advocate against the law than anyone on this board.

    Animals...equality.

  • ChrisO||

    Perhaps they ought to issue everyone a waiver.

  • ANONYMOUS||

    UN PRESIDENT TIM KALEMKARIAN, US PRESIDENT TIM KALEMKARIAN, US SENATE TIM KALEMKARIAN, US HOUSE TIM KALEMKARIAN: BEST MAJOR CANDIDATE.

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