Political maneuvering misses the point on rising costs

Nov 01, 2009

Few are paying attention to the cost curve and the potential for state to enact their own reform measures

IT'S NOT THE SAME

At the same time, private sector companies must bear all of these costs, yet somehow compete in the marketplace with the public option exempted from the costs and from any need to return a profit.

Other aspects of the structure, while not immediately identifiable as having a potential to increase private-sector costs, could have a significant effect on the way the private sector conducts the business of insurance. For instance, policies currently being debated might drastically alter provisions in antitrust regulation.

Currently, the private sector health plans and the business of insurance are regulated on a state-by-state basis, with the insurance industry benefitting from an antitrust exemption via the McCarran-Ferguson Act.

All of that may change, however. For instance, as of presstime, President Obama had indicated that Congress should revisit the McCarran-Ferguson Act and, specifically, provisions in that act exempting insurance companies from antitrust exposure.

There have also been discussions that a federal charter should be drawn up under which the federal government, not the individual states, should regulate insurance.

Finally, one aspect of the healthcare debate that has received less national attention, but is of great interest to the private sector, is the extent to which states may enact their own healthcare reforms.

Some states, for instance, have recently entertained vigorous debates related to regulation of minimum payments to doctors and hospitals and reforms to the small group and individual markets. And with all this activity, there is very little attention to the factors driving healthcare costs and almost nothing to address that in the proposed legislation.

Most proposals involve a provision prohibiting exclusions for enrollees' pre-existing conditions, which would essentially provide guaranteed issue insurance coverage. This too has the potential to increase costs.

This column is written for informational purposes only and should not be construed as legal advice.

Barry Senterfitt is a partner in the insurance industry practice of Akin Gump Strauss Hauer & Feld LLP in the firm's Austin, Texas, office.

Janet Farrer is an associate at Greenberg Traurig LLP, Austin, Texas.

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