Lone Star Blues

If that is the case, then why did Texas feel the need to phase in the MLR?

There was a fear that certain carriers would exit certain markets if they didn’t have enough time for certain markets to become profitable, or to renegotiate contracts with providers. Small group rates, for example, must be filed with the Texas Insurance Department, so for a health insurance plan to got rhough the market without losing money, it will need to refile its rates and get them approved. This impacts every state department that sets rates. So that may be more work than anybody can handle. And if a carrier can’t make money in a certain county, and it if can’t make it up elsewhere, it might pull out altogether.

Have any carriers actually pulled out, though? Or have any even suggested that they were actually going to?

Not yet, but the scenario that everybody is waiting on is the individual mandate. In my estimation, that is still the whole thing that is holding PPACA over everybody’s head. Everybody is waiting for the other shoe to drop or for 2015 to hit.

A lot of PPACA’s critics seem to be looking for the Supreme Court challenge to the individual mandate as the last real chance that PPACA could be overturned in its entirety. There are those arguing that there is no severability between the individual mandate and PPACA itself, so if you chuck out the mandate, you chuck out PPACA. But what if that doesn’t happen? What if the industry simply has to learn to live with PPACA, and the MLR? What are insurers in Texas doing now to prepare for that?

It’s hard to say what the future holds. We are trying to get ready for a healthcare law that nobody knows what it will look like, when it is all said and done. It’s like taking your car into the shop to get it fixed but you don’t know what the problem is. You don’t know what to look at or what the cost will really be. So we’re wondering, how will this impact us in the end?

My estimation is that the individual mandate is the key to the whole thing. You can’t have guaranteed issue without guaranteed coverage. Right now, the rules are written that you can’t deny anybody coverage for pre-existing conditions, so we have to cover everybody. But if nobody has to have the coverage, then that’s not fair for insurance carriers.

The biggest downfall of PPACA is that it does nothing to lower the cost of healthcare. You want to make healthcare more affordable, but is the answer to tell the carriers not to make any money? The MLR accounts for 20% overhead. That includes the cost of employment, employee benefits, agent and broker commissions – and nobody is set up to sell without agents to sell for them – expansion into new markets, and the ability to develop better product lines. There are a lot of costs in that 20%. And yet the effort has been to focus on lowering the 20% of the cost, rather than the 80% of it. That does not make sense.

We have heard this argument from health insurers before; that PPACA doesn’t actually cut down the cost of healthcare. Fair enough. But we also do not hear from insurers what they would do to cut down the costs of healthcare themselves. Any ideas?

That is an unanswered question. How do you provide the best health care in the world and still lower the cost of it? I don’t know the answer to that. But I do know that only attacking the 20% of the healthcare premium on the carrier side is not enough to make it more affordable.

You mentioned before that nobody is set up to sell health insurance without agents. Yet the MLR seems to go after agents’ commissions as a cost to lower. We are also seeing people buying more insurance online and through their smartphones. Could you see a world without agents?

Agents do more than just sell health insurance. The average employer is not set up to meet mandates and requirements, like when somebody dies, for example. Agents understand COBRA laws, get proper documentation, educate employers, walk them through the process on hiring. That’s where agents help, not just on the health side, but on the life and dental side, too. Health insurance bring a lot to the table. Can insurance be bought on the web? If you know what you want, yeah, but the average person doesn’t know that.