Making one of her rare public appearances Health & Human Services Secretary Kathleen Sebelius, the Mistress and High-Overlord of the Anti-American Death Panel, appeared on the Daily show to be grilled on the Affordable Care Act by John Stewart. And a slow roast grilling it was...
Unlike the Republican Candidates who don't have any of their facts right, Jon Stewart actually knows what he's talking about in regards to the PPACA. Really he does.
First Stewart challenged the apparent shift from Federal to State based control within the formation of the Exchanges for setting benchmarks and plan coverage. Sebelius answered that "It's a combination" of Federal and State oversight.
Sebelius: Every State now has insurance oversight. every state now has consumer proctections.
Stewart: I was under the impression that about half the states had the ability to have insurance oversight and half of them did not.
Sebelius: Well, a bunch of them now are talking advantage of the revenue stream from the affordable care act. are putting new regulations in place. We now have an additional oversight, not all of them have it, but we hope they'll get it soon.
I will discuss this over the orange squiggle of power.
They both go through this rather quickly, but what Secretary Sebelius is talking about is the additional regulatory authority that was granted under the PPACA, which I wrote about last June, wherein HHS finalized their rules for Insurance Rate Hikes.
The PPACA did not grant direct regulatory authority to the HHS over these rates, instead that authority is granted to the States (just as people like Mitt Romney claim that it should be) and HHS provides both analytical and financial support to the states to help their regulators comb through the insurance company double-talk and get to the bottom of what is going on. Some states don't have legal authority under their local laws to allow regulators to dictate and control rate hikes, other states do. To help even this out HHS has provided grants of up to $250 Million to help these states implement an effective regulatory scheme.
Under the new rule, federal and state officials will review rates in the individual and small-group insurance markets. In effect, the administration said, large employers can take care of themselves, as they are more sophisticated purchasers and have more leverage in negotiating with insurers.
Federal officials acknowledged that they did not have the authority to block rates that were found to be unjustified. But they said many states had such authority, and the federal government is providing $250 million to states to strengthen their capacity. A small number of states, opposed to the federal health care law, have turned down the money.
Sebelius then talked about the 80% MLR.
Sebelius: The new 80/20 rules says that every plan has to spend 80 cents (from every dollar) on Health Benefits, not CEO salaries. We're collecting that data this year. (Crowd Cheers)
Stewart (To Crowd) Really? Explain to them very quickly if they can't do that, or don't want to - they get away with it.
Sebelius: No no, here's whats going to happen. Insurance companies are going to start sending checks back to consumers. We're collecting the data this year...
Stewart: How are you going to enforce that, do you have the enforcement ability?
Sebelius: We do. We have in the law, we have the ability. What they asked us to do in a number of cases was to give them a pass, well "we'll be at 60cent on the dollar - we'll be at 70 cents on a dollar", and by and large we said "No".
I understand why Jon is skeptical, because as I just discussed the Federal Government does not have direct regulatory authority over health insurance... but they do set the rules or who can and can not take part in the exchanges, and that's where the enforcement takes place. Under the PPACA no insurer who fails to abide by the 80% MLR can take part in the exchange, which means they will be blocked from access to all of the sweet, sweet tax credit premium subsidies that are only available to persons buying health insurance through the exchange.
Jon's right, they can say "No", but it's not like they can't do something about it and make them pay a price for it. This is why the insurer are coming to HHS and going.. "but we cant...". Yes, you can. Yes, you Will.
And the truth is, it's already working. One of the most egregious price gouging insurers, Anthem Blue Shield, who in past years have attempted to raise their rates as much as 59%, announced this past year that they would be offering massive rebates to their customers and cutting their rates in exactly the manner that Secretary Sebelius describes. That's because, that's what the Law says they have to do if they want access to the Exchanges.
In part two, they address the fact that when Mitt Romney says that RomneyCare is different/better than ObamaCares because he would let states make up their own choice rather than have a "One Size Fits All" approach - he's kind of full of Sh*T.
Stewart: Is the Federal Government the arbiter of this, or are the states - isn't that Mitt Romney's argument?
Sebelius: No, actually the way the law was written in the first place was that the States have to take the lead.
The irony is that States who are fighting the Affordable Care Act, who are saying "We won't participate at all", that's the only time the Federal Government steps in. If the state won't set up their exchange, we come in and set it up.
Stewart: You set up the exchange if they won't do it?
Sebelius: You betcha.
See that Mitt. The States can do what they want. Vermont is even going Single Payer, and a Single Payer Bill is currently working it's way through the California Legislature. States do have the power, it's only when they completely FAIL, that the Federal Government comes in.
And then Stewart addresses a point that has dogged the Heritage Foundation and the hard right, what if Employers just decide to drop their coverage and dump everyone onto the Exchange? Isn't that a Government Take-Over of Health Care?
Stewart: Can the employer dump you into the exchange? What if your employer provides your insurance?
Sebelius: If you get your insurance through your employer, they will have to provide the (required) benefits coverage through their plans.
Stewart: Can they dump you into the exchange?
Sebelius: At the end of the day, there is no mandate now. In 2014 if they don't cover you, they will pay a penalty.
Stewart: Is the penalty more than the cost of the insurance?
Sebelius: (Awkward Pause) The penalty will help pay for the tax credit that the employer would get on the insurance. And we don't think... in Massachusetts, the only state with a full blown exchange, employers did not drop coverage they actually increased coverage.
Stewart: Is there a consequence other than the fine or shame, because I know the shame thing is not gonna work?
I think Jon brings up a good point here, but it's actually a bit moot. The major disadvantage the exchanges will have is that they will be largely covering those people who right now are in the temporary High-Risk Pools that were setup by the PPACA. Those plans are exceedingly expensive - although it should be noted that the ones run by the Federal Government because certain wing-nut controlled states wouldn't comply have actually cut their premiums by as much as 40% - and the concern is that the exchange premiums are likely to remain high because they will contain the sickest of the sick, who'll need the most complex and expensive types of care.
That is, unless Employers actually DO begin to stop covering their employees and they begin to go out on the exchange and buy their insurance themselves on the Exchange (with government subsidies). If the pool expands, the risk decrease and so should the median cost especially when every insurer in the exchange has to spend 80% of the premiums on actual care, not marketing, or trying to find ways to kick people off of the insurance they paid for.
Eventually Stewart figures this out.
Stewart: I know what's going on here, I just figured this out - this is a backdoor....
Sebelius: Having a stable insurance market is important.
Stewart: Do you think, a bunch of people dump it to the exchange, and it becomes kind of a back-door of government run program - not a "take over" necessarily - but making it a government responsibility, and it decouples it from employers and people will get it from through tax credits rather than through their employers, and then suddenly were Sweden?
Sebelius: I think what will have is filling in the gaps in the private market. A lot of people are job-locked because they're afraid of losing their coverage. It should stabilize the coverage for 80 million Americans who have employer based coverage.
And then they address the SCOTUS.
Stewart: In two months the Supreme Court takes this up, what happens if they say mandates are unconstitutional, what then?
Sebelius: I think they'll find it constitutional.
Stewart: What you do if they uphold the rest of it, but the mandate are gone?
Sebelius: We keep going. The mandates are the fastest way to get people covered, but there are other ways.
So, we keep going. The States refuse to co-operate, they keep going and set up their own high-risk pools and their own exchanges. If insurers won't meet the 80/20 requirement, they don't get in the exchanges and perhaps lose access to $Million in additional business and subsidies. If the mandate gets struck down... they keep going.
It's not simple, it's not clean - but it's constant positive movement. Constant progress.
And nary a Death Panel was mentioned.