Las Vegas Sun

May 26, 2024

The Policy Racket

Nevada secures partial waiver from federal health care law

Nevada got a partial waiver from the health care law — a significant development that Democrats are dismissing as par for the course and Republicans are claiming as a political victory.

The Health and Human Services Department announced late Friday that Nevada had secured a statewide waiver from certain implementation requirements of the Obama administration’s health care law, because forcing them through, the department found, “may lead to the destabilization of the individual market.”

The announcement makes Nevada one of only three states to have compliance requirements under the health care bill waived.

Nevada’s Insurance Division had appealed to the feds to reduce the federal requirement that health plans serving people who buy insurance on their own must spend at least 80 percent of the money they collect on medical expenses. Under the national rule, companies that don’t spend that percentage of revenue on medical costs have to cut policyholders rebate checks starting this year.

Nevada asked that requirement be reduced to 72 percent for one year, arguing that top insurance providers would be so strapped to make the payments that they’d exit the state market.

Health and Human Services didn’t fully buy that argument, but did agree to reduce the requirement to 75 percent for a year, expressing concern about what might happen to people with policies from insurers Golden Rule and Aetna if they didn’t.

Together, Golden Rule and Aetna cover 24 percent of Nevada’s insured; but they, along with Sierra Health and MEGA, which cover another 4 percent, are spending nowhere near 80 percent of revenue on health care coverage.

The change is less the feds giving underperforming insurance agencies a free pass than buying time for providers to shape up, or policyholders to ship out with reasonable warning time: Nevada has no law that says if you lose insurance because your insurer shuts down, another company has to pick you up. To prevent that, Health and Human Services determined it had to “provide the opportunity for plans with low ‘medical loss ratios’ to adjust their business models to reach 80 percent” with the reduced, 75 percent mandate for the rest of 2011 — that being the average medical loss ratio that the state’s top 10 insurers currently post.

For Republicans, the waiver is proof of what they’ve been arguing all along — that Obama’s health care law was never going to work and has to go.

“It is becoming increasingly clear how flawed this law really is,” Nevada Sen. Dean Heller said in a statement Monday. “Not only did it cut a half trillion dollars from Medicare, impacting thousands of Nevada’s seniors, now the law would have driven health insurers out of our state if a reprieve had not been granted.

“This is why ‘Obamacare’ will not work for Nevada,” Heller said.

But Democrats say that acknowledging it may take Nevada one more year to reach the Obama administration’s goals is a far cry from declaring the health care law deficient. In that catch-up year, they note, underperforming insurance companies will still be required to improve their performance, current customers of those companies will collectively receive a better coverage return on their policies, and there will be more providers to adopt currently uninsured Nevadans.

“Even with this waiver, insurance companies will still have to invest more in providing health care for the families they cover in the Silver State,” said David Cherry, communications director for Nevada Rep. Shelley Berkley, who voted for Obama’s health care law and continues to support it. “Congresswoman Berkley disagrees with Republicans who believe insurance companies should not have to increase the amount they spend on actually providing health care to Nevadans.”

"One of the primary goals of health insurance reform was to improve care by ensuring that more of patients' premiums are spent on medical care - not bloated CEO salaries and marketing," said Nevada Sen. Harry Reid, who has a personal link to the health care law: as majority leader, he steered it through Congress. "Last week's waiver demonstrates the flexibility that states like Nevada have as this important provision becomes implemented over time."

New Hampshire received a similar, but more extensive waiver: It mandates a medical loss ratio of 72 percent for the rest of 2011, and 75 percent in 2012, with the expectation that insurance companies there will meet the 80 percent threshold by 2013. Maine secured the first state waiver. Five more states have applied for waivers and await decisions.

The partial waiver throws a bit of spin the Republicans’ way that’s bound to be a factor as the parties warm up for another round of fights over health care. This time the fights will likely center on changes for fiscal 2012 laid out in the House budget penned by Rep. Paul Ryan, which the entire House Republican caucus — including Heller, who was in the House at the time — has voted for.

That bill would repeal the health care law, removing insurance company spending mandates such as those that were waived, the exchanges and new rules on compulsory coverage regardless of pre-existing conditions — though that is a provision Republicans say they would restore in a replacement — from the health care mix. Ryan’s bill would then restore the $500 billion diverted to some of those items back to Medicare, and begin to convert Medicare to a subsidized insurance market system for those age 55 or younger.

Democrats argue the changes will compromise the purpose of the Medicare system; Republicans counter that change is necessary to stave off disaster, as Medicare is expected to become insolvent by 2024 — five years sooner than expected, according to the board of trustees that oversees the program.

The urgency created by that amended date may be a political windfall for proponents of Ryan’s plan.

In recent weeks, there’s been some uncertainty about the plan, as certain factions of the GOP seem to have slowly distanced themselves from Medicare as a way to slash the budget. Even as Republicans have gone to the stump to defend Ryan’s Medicare changes, other top dogs in the party have indicated they might prefer a solution that would spare the program from cuts or Ryan-esque existential changes, effectively steering clear of the program.

Democrats have remained firmly opposed to Ryan’s plan, though on Monday, House Minority Leader Nancy Pelosi said she wouldn’t be opposed to discussing changes in Medicare as part of negotiations about raising the debt limit, reached today. The fate of those talks is tightly linked to the budget.

But although the amended exhaustion date of the Medicare fund would appear on its face to swing the political pendulum one tick further in Republicans’ direction, the trustees’ report is not quite so clear on that point. While ratcheting up the doomsday date on Medicare to 2024 from last year’s estimate of 2029, it also lauds Obama’s health care bill for staving off what would have been a much worse scenario. Without the bill, trustees said, Medicare could have been insolvent as early as 2016 — the implication being that if the health care law is repealed, Medicare may well go belly up in just five years.

What is certain is that Friday’s developments are sure to become fresh fodder for an acrimonious political debate about health care, and that these issues will partially pave the campaign trail for both sides.

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