Articles >> How Does One Define Medical Care?

The Affordable Care Act — the new health care legislation signed by President Obama back in March — is supposed to help trim costs, make the system more efficient and help save money for consumers and companies. One provision of the law, which takes place next year, says health insurers must spend eighty to eighty five percent of consumers’ premiums on medical care, instead of things like CEO salaries, administrative costs and so on. However, what, exactly, constitutes “medical care”?

According to an article in The Palm Beach Post entitled, “Health reform law requires officials to define what counts as care”, insurance commissioners are meeting in Seattle this weekend to figure out exactly that. While one might thing that “medical care” might simply constitute paying bills, insurance commissioners are looking for something a little more complex and convoluted. Some comissioners want things like fraud fighting efforts, quality improvement projects and even broker commissions as part of the definition of medical care.

The law specifies that the insurance commissioners’ group has to define the medical care part of the formula the insurance industry calls the “medical loss ratio,” which tracks the amount of consumers’ premiums actually go to medical care as opposed to overhead. Commissioners worry that this would put smaller insurance companies out of business before state exchanges can be established, and would, in the long run, make health insurance more expensive and harder to obtain.

Isn’t that what we want out of this health insurance legislation, though? To weed out inefficient companies in order to help make the system more efficient and affordable? Thankfully it seems that, ultimately, the commissioners want the law to work, and their recommendations will go to the U.S. Department of Health and Human Services for final approval. It will be interesting to see what comes out of this weekend’s conference and what is defined as medical care.