As President Obama signs landmark healthcare legislation today, a question for us to consider is how the property/casualty insurance sector may be affected by changes in the nationÃ¢â‚¬â„¢s healthcare system. HereÃ¢â‚¬â„¢s what the bill means for three key areas that have an impact on p/c insurers and that weÃ¢â‚¬â„¢ve highlighted in previous posts:
- Antitrust exemption: The healthcare legislation does not include a repeal of the industryÃ¢â‚¬â„¢s limited exemption from federal antitrust rules that has been in place for 64 years under the McCarran Ferguson Act. The Property Casualty Insurers Association of America (PCI) has applauded the decision: Ã¢â‚¬Å“We appreciate that Congress recognized repealing McCarran-Ferguson would not provide any benefits to the consumer or the insurance marketplace.Ã¢â‚¬ Check out I.I.I. info on antitrust law and insurance.
- Tort reform: Despite President ObamaÃ¢â‚¬â„¢s earlier pledge to address medical malpractice liability concerns as part of healthcare reform, the bill does not contain any meaningful tort reform. A Congressional Budget Office (CBO) analysis last October estimated enacting medical liability reforms would reduce federal government budget deficits by roughly $54 billion over the next 10 years. Check out I.I.I. info on medical malpractice.
- Workers compensation: Changes in the medical landscape tend to have an impact on workers compensation insurers. Over at Managed Care Matters blog, Joe Paduda observes that while changes to the American healthcare system are more comprehensive than anything weÃ¢â‚¬â„¢ve seen in decades, not all of this will be for the better. He discusses some of the likely implications for workers comp here and here. Check out I.I.I. info on workers compensation.
Ahead of a bipartisan healthcare summit this Thursday, President Obama today will announce a revised plan for healthcare reform, including a proposal giving the federal government new power to block so-called Ã¢â‚¬Å“excessiveÃ¢â‚¬ rate increases by health insurance companies. According to Administration officials, the legislation attempts to bridge the differences between the health bills passed by the House and the Senate last year. The focus on expanding federal regulation into the domain of insurance rates comes after health insurer Anthem Blue Cross of California recently announced premium increases of up to 39 percent. Health and human services secretary Kathleen Sebelius last Thursday issued a report sharply critical of the double-digit increases sought by insurers. However, a February 18 New York Times article by Reed Abelson reports that analysts and health economists say the challenging business environment may leave health insurers little choice but to raise prices if they want to protect profits. The article reports:
Ã¢â‚¬Å“The weak economy and the unrelenting rise in the cost of medical care make it increasingly difficult for companies to avoid substantial rate increases Ã¢â‚¬“ even if those increases provide fresh fodder for Democrats seeking to pass the now-stalled health care legislation in Congress.Ã¢â‚¬
It goes on to discuss a number of topics relevant to the current debate on health insurance reform such as adverse selection (where only those most at risk buy coverage) and mandatory coverage. Meanwhile, over at Managed Care Matters blog Joe Paduda has a timely post on why the focus on health insurer rate increases may be nothing more than a red herring. Check out I.I.I. info on health insurance for tips on how to pick a plan and how to lower health insurance costs.
When President Obama pledged to address medical malpractice liability concerns as part of healthcare reform, and directed the Department of Health and Human Services to move forward with incentives for states aimed at curbing lawsuits, insurer and doctor groups welcomed the step but cautioned the devil would be in the details of the plan. The details of House speaker Nancy PelosiÃ¢â‚¬â„¢s 1,990-page healthcare bill that passed Saturday on a 220-215 vote underscores the need for that cautionary note. A provision in the bill does establish an incentive program for states to adopt and implement alternatives to medical liability litigation, BUT a state is not eligible for incentive payments if it puts a law on the books that limits attorney fees or imposes caps on damages. A November 6 OpEd in the Washington Times calls the provision a poison pill:
Ã¢â‚¬Å“Fee limits or damage caps are the two most popular lawsuit reforms in states across the country, and they are demonstrably effective at cutting malpractice-insurance rates and attracting more doctors to the states that embrace them. To pretend to encourage tort reform while punishing states that actually implement reforms is akin to encouraging a diet while assessing fines for losing weight. ItÃ¢â‚¬â„¢s dishonest and it ought to be a deal killer.Ã¢â‚¬
What do you think? Check out I.I.I. information on medical malpractice.
TodayÃ¢â‚¬â„¢s headlines are full of promise on U.S. healthcare reform after the Senate Finance CommitteeÃ¢â‚¬â„¢s milestone vote in favor of a bill crafted by Senator Max Baucus (D-MT) that would overhaul the healthcare system. ItÃ¢â‚¬â„¢s worth noting that this bill does not address medical liability reform. Last week the Congressional Budget Office (CBO) estimated that implementing a typical package of medical liability reform proposals nationwide would reduce total U.S. healthcare spending by about 0.5 percent (about $11 billion in 2009). This figure includes some 0.2 percent in savings from lower direct spending on medical liability premiums and an additional 0.3 percent in indirect savings from slightly less utilization of healthcare services. Overall, enacting medical liability reform proposals would reduce federal government budget deficits by roughly $54 billion over the next 10 years, according to CBOÃ¢â‚¬â„¢s analysis. This is something to keep in mind as the healthcare reform debate moves to the floors of the House and Senate. Check out I.I.I. information on medical malpractice.