What qualifies as a health care expense?

A stethoscope wrapped around a roll of $20 bills represents the costs of health care.

TEXT OF STORY

Kai Ryssdal: Even at 2,000-whatever-it-is pages long, the health care reform law left a whole lot out. Details big and small are up to federal agencies to take care of. Eventually, everything's going to fall to the Department of Health and Human Services. They're going to have to actually write the rules of health care reform.

One of the big ones -- a rule of keen interest to both insurance companies and their customers -- is something called the medical loss ratio. It obliges insurance companies to show they're spending a certain amount of the premiums they get on actual care instead of administrative costs or profits.

Marketplace's Nancy Marshall Genzer reports.


Nancy Marshall Genzer: This is command central for the health care reform law: The main headquarters of the Department of Health and Human Services in Washington. The place is humming. Workers greet each apologetically, saying, "I've just been so busy."

Worker 1: That's why I haven't called you.

Worker 2: Well, when you get some free time.

Worker 1: Yes I will.

Free time is in short supply around here. So is work space. Staffers assigned to the medical loss ratio rule got rid of the microwave and fridge in their break room so they'd have more room to work. The team members are so stretched they delegated a big chunk of the job to an outsider, Sandy Praeger.

Sandy Praeger: Well, I start my day with a couple of stiff cups of coffee so I can stay awake through all of this.

Praeger is the state insurance commissioner of Kansas. She heads a panel of state commissioners advising the federal government on the medical loss ratio rule. The rule will specify which expenses insurance companies can count as care. The commissioners will write the rule and submit it to the department for final approval. Everybody wants Praeger's ear -- insurance companies, consumer advocates...

Praeger: Responding to all the questions and all the issues is kind of like drinking water out of a fire hose. It's coming at us fast and furious.

The intent of the rule is to make sure most of the money paid for health insurance is spent on health care. Not advertising, not salespeople, not CEO salaries, not profits. The rule requires insurers to spend at least 80 percent of the premiums they collect on care. The biggest question: What exactly qualifies as a health care expense? Insurers and their lobbyists want as broad an interpretation as possible. Consumer advocates are on the other side. Both sides were in Seattle last month for a meeting of the insurance commissioners.

The pro-reform group, Health Care for America Now, was handing out "lobbyist disinfection kits" -- hand sanitizer and deodorant soap.

Health Care for America Now worker: Disinfect yourselves. Inoculate yourself from these lobbyist lies.

Last week, insurers got an idea of what the new rules might look like when a committee of commissioners released a draft rule. The rule allows insurers to deduct certain taxes, making it easier to meet the ratio. But under the proposal, insurers can't count things like fighting fraud as a health care expense. Marketing doesn't count, either. So, it might be harder for insurers to count brochures that promote wellness, for instance, as care.

Robert Zirkelbach is a spokesman for the insurance trade group America's Health Insurance Plans. He says some materials should be counted as care.

Robert Zirkelbach: So if you understand that it's helping patients, giving them information they need to take care of their particular health condition, you can see very clearly it's exactly the types of programs and services that people agree we need to be doing more of in our health care system.

Consumer advocate and former insurance industry executive Wendell Potter disagrees. He says health insurers are trying to put as much in the care column as possible, to free more money for salaries and profits.

Wendell Potter: A lot of money that we spend on our premiums goes into the pockets of well-paid executives. If congressional intent is carried out, this will make these companies behave differently and spend our premium dollars differently.

The version released last week is just a draft. All the insurance commissioners still have to approve it. They plan to consider it at a national meeting next month. Until then, the battle between lobbyists and consumer advocates will continue.

In Washington, I'm Nancy Marshall Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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