Today’s elections will determine the future of federal health care reform. No matter what the actual outcome in terms of numbers of seats changing party or initiatives adopted, voters will communicate at least the discomfort with and uncertainty about reforms. Whether the reforms withstand the election depends upon how well the reforms are re-calibrated to reflect the realities of insurance markets. In my view, the greatest weakness of these reforms was that too many were asked to do too much too soon.

When I began this blog shortly after Congress adopted a comprehensive health care reform measure, I noted that Washington State had attempted similar reforms in the early 1990s and faced a political backlash resulting in a political change of control and a gradual dismantling of these reforms. But even with repeal of most of the reforms, Washington State remains one of the most “reformed” health insurance markets in the United States. Republicans retained many of the “patient protections” and market access reforms favored by the public.

When Washington D.C. got around to its reform in March, many of the “patient protections” and “market reforms” mirrored those already existing in Washington the state. The federal reforms require changes in Washington State markets that in many instances make no significant improvement such as those governing independent review of health plan claim denials. Few issues reflect the impact of preemptive and premature federal reform than the ping pong game being played over Washington’s association health plans.

Recall that Washington’s Insurance Commissioner has regulated association health plans as large group plans for nearly 15 years. That means large group rate filings, large group plan design, and treatment of association member employers as “beneficiaries” entitled to equal treatment by the association plan. It also means that methods for pricing, management, and reporting of plan benefits follow large group patterns.

After adoption of the federal reforms in March, the Commissioner advised that state rules governing association plans would continue. The Commissioner crafted a response to federal reform that followed a logical progression and implementation appropriate to the state’s historic regulation of association plans. A few weeks ago, employees of HHS informed the Commissioner that his approach was not permitted under the federal reforms and that each association was not a large group but rather a collection of small group plans each separately regulated.

However much sense this analysis makes in academic terms, the real affect was immediate. Small employers were told that their “grandfathered” coverage was no longer “grandfathered”; associations were advised to develop two sets of plans (reformed and grandfathered); insurers were told to expect reporting requirements that fractured the current large group reporting of association data into a mélange of large and small group and individual plans; and loss ratio requirements would be imposed based upon association member size. Naturally, all hell broke loose.

Being elected, the Washington Commissioner was not willing to simply accept the advice and soldier on without sharing the political burden. He sent a letter requesting that HHS “own” the advice and the HHS interpretation of federal reform of association health. How do you think HHS responded before a major election? Crickets.

Even worse, HHS called and advised the Commissioner that they needed more time to think things over. The Commissioner was left dangling in the wind. At a scheduled meeting to discuss association health plan regulatory transition, the Commissioner’s office advised association plans to go about their business as though the earlier announcements had not occurred.

Whether or not you have a “dog in this hunt”, the past month’s regulatory whiplash is symptomatic of federal reform so far. You cannot ask for the creation of new agencies with new tasks due nearly as soon as the people are hired and expect an entire industry to integrate systemic changes in months in a system that operates on an annual basis. You cannot expect state regulatory agencies to set aside their daily duties while they shotgun new rules into a market already in turmoil with unemployment, recession, and ever increasing health care costs.

The strangest fact about today – Election Day – is that I am more comfortable predicting votes and election outcomes than I am of providing reliable legal advice to clients about the future of health plan regulation. Nothing breeds fear and opposition more than uncertainty. Washington State took less time to undo health care reform than was taken crafting reform; the other Washington appears to be headed down the same path for the same reasons.


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