The State Flexibility ObamaCare Doesn't Allow


The Department of Health and Human Services (HHS) likes to tout the "flexibility" it claims it's giving state governments to implement ObamaCare. An agency press release last month, for example, announced the release of rules governing ObamaCare's "essential health benefits" under the headline "HHS to give states more flexibility to implement health reform." Rules governing the establishment of the law's state-run health insurance exchanges promised to give states flexibility 38 separate times.

But when it comes to ObamaCare's new health insurer spending regulations, HHS doesn't seem nearly as interested in letting states have the flexibility to implement the law as they think might be best. This week, HHS denied the requests of two more states, Kansas and Oklahoma, to adjust the law's medical loss ratio (MLR) requirements, which require insurers to spend a at least 80 or 85 percent of their total premium revenue on activities that meet the government's definition of "clinical services." Last month, HHS denied a similar request from Florida to modify the law's MLR requirements.

That's not to say that all states have gotten the same treatment. Last March, Maine's MLR request was granted on the basis of an HHS determination that the rule "has a reasonable likelihood of destabilizing the Maine individual health insurance market" which indicates that, at minimum, HHS is aware that the rule has the potential to upend an insurance market. But never mind the downsides; federal bureaucrats, not state governments, will determine if the potential problems are bad enough to matter. The differing decisions just underlines the point: HHS seems more committed preserving its own flexibility to selectively apply ObamaCare's rules and regulations when and where it wants than to granting states real freedom to determine how they would like to implement the law. 

Related: The Congressional Budget Office says the MLR requirements aren't quite a government takeover of health insurance, but they're pretty close