By Kevin Binversie

On Tuesday, Theodore Nickel, head of the Wisconsin Office of the Commissioner of Insurance, wrote a letter to HHS asking for a three-year waiver. Such an action makes the Badger State the 17th to request such a waiver.

 

At issue is what is called the Medical Loss Ratio requirement in the law. MLRs are the rates insurance companies pay. Its percentage is based on how much of each $100 paid out in a claim is paid by the insurer. Most insurance plans offer MLRs between 60 percent to 110 percent of costs. As the law is written, insurance providers and other companies must provide an MLR of 80 percent by the end of the year. What HHS waivers provide is three years for a company, union or state to make the necessary changes.

 

According to Nickel’s letter, he wants HHS to allow Wisconsin to create a step system for phasing in MLR compliance. MLRs would be set at 71 percent for 2011, 74 percent for 2012, 77 percent in 2013 and full compliance by 2014 — the year the bulk of the act is to take effect. This arrangement, Nickels lays out in his letter, will avoid a situation that he said could lead to “a reasonable likelihood that market destabilization and, thus, harm to consumers will occur.”

 

In English that means without the waiver Wisconsin’s insurance market could see massive disruptions in service, layoffs at insurance companies as they try to cut costs, and even providers leaving the state.

 

Such a scenario could end up leaving consumers in a bind when it comes to health insurance choices. Critics say the insurance commissioner is looking out more for insurance companies than the insured, and trying to undermine President Barack Obama and the federal health care law.

 

While there is merit to saying a defense of insurance companies is going on, the sheer number of states requesting waivers — Indiana and Michigan joined Wisconsin in asking for waivers this week, as well — is a statement unto itself. It tells you right off the bat something is fundamentally wrong with the law if officials in nearly 34 percent of states are asking for more time to make it work. Were states not given enough time to get the job done? Or, was the timeline more about future political opportunities than sound public policy?

 

Former Speaker of the House Nancy Pelosi, D-Calif., most famously said during the lead-up to passage last year, “We have to pass the bill, so that you can find out what is in it.” That statement has since become something of a portent about attitudes — now at the lowest levels of approval since passage.

 

As more Americans find out what is in the federal health care law, the more they disapprove of it, helping to prove it was bad law from the start. Something as crucial as states needing waivers to key aspects of the law only helps to cement that.

 

Kevin Binversie is a Wisconsin native who has been blogging on the state’s political culture for more than eight years. He has served in the George W. Bush administration from 2007-2009, worked at the Heritage Foundation and has worked on numerous Wisconsin Republican campaigns in various capacities, most recently as research director for Ron Johnson for Senate. Contact him at kevin.binversie@franklincenterhq.org.