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UnitedHealth Group Inc
As the Obama administration wraps up its second year of deploying provisions of the 2010 health-care overhaul law, a pattern has emerged. When it comes to issues that matter to insurers, providers, and employers, the president and his key aides show considerable flexibility, listening to objections and modifying proposed regulations. When it comes to ones that matter to consumers, they are usually less accommodating.
Example: The law requires insurers to spend as much as 85¢ of every premium dollar covering consumers’ claims and improving care, or else pay rebates. Insurers such as UnitedHealth Group (UNH) dislike the idea and have sought exclusions from what counts as premiums. Among the exclusions the administration has agreed to: the dollars insurers use to pay most of their federal taxes. This, even though the chairmen of the congressional committees that drafted the law have told administration officials they never intended that.
Example: The law requires all Americans to have insurance by the beginning of 2014 or face a fine. Because the cost of coverage is so high, it offers to help families with annual incomes of up to about $90,000 pay their premiums. To ensure the help doesn’t go to people who’ve been offered affordable coverage through their employers, however, administration officials rejected compromises suggested by consumer advocates and adopted a stringent rule defining an offer as “affordable” if premiums cost employees no more than 9.5 percent of family income for themselves alone, even if including family members would push the price above the threshold. A Bloomberg Government study estimated the rule could leave as many as 6 million Americans who’d otherwise qualify for help stuck in a no man’s land between the measure’s requirement that everybody have insurance and their inability to get the assistance needed to buy it.
Example: Given that the law requires Americans to have insurance, advocates argued that consumers should have more rights to appeal decisions by their insurers. Initially, administration officials agreed, issuing rules that required most insurers to provide for independent review of appeals; expanded the kinds of decisions that can be appealed to include clerical errors; and even required that documents be in beneficiaries’ native language. But after insurers and employers complained, the administration reversed course. A Bloomberg Government analysis found the new rules weaken the independence of reviewers and largely prevent appeals based on administrative errors. The language requirement was retained only for English and Spanish.
Why has the administration gone to such lengths to accommodate insurers, providers, and employers, but not consumers? In large part, the answer has to do with the law, which for all the election year talk about a government takeover is really a wraparound. Instead of rooting out and replacing private insurers and medical providers, Congress and the president chose to work with them to create an overhauled system. That means constantly weighing how far reluctant players can be pushed before they bolt.
Supporters say Obama has managed the balancing act about as well as could be hoped. “The president has been very practical about implementation. He’s tried to be faithful to the basic pro-consumer orientation of the law at the same time as accommodating” business, says Timothy Jost, a health law professor at Washington and Lee University in Lexington, Va., and an ally of the Democratic administration.
No doubt politics has played a part in determining the tilt. Republican Gail Wilensky, a senior fellow with the medical charity Project HOPE and a top health-care official under the first President George Bush, traces most of the administration’s interest in accommodating business to “a very strong desire not to disturb markets prior to the election.”
Perhaps the biggest question about Obama’s approach is: Will the resulting health-care system be something an ordinary person can understand and use? Some worry it won’t be. “If there’s a challenge to implementing the law, it’s not that it will impose too much change on the old insurance system, rather that it will provide too little help to get consumers the protection they need,” says Judy Feder, a health-policy expert with the Urban Institute and Georgetown University and a senior official under President Bill Clinton. The answer will come with time, an impending decision by the U.S. Supreme Court on the law’s constitutionality, and the results of the November elections.