Health insurance will be reformed by a little known department

by Joyce Frieden

In one of those “important but little noticed” announcements that government officials are prone to put out, the Department of Health and Human Services recently let the world know – via the Federal Register — that it has created an Office of Consumer Information and Insurance Oversight to assist with implementation of the newly passed health insurance reform law.

This new office has four divisions. Here are a few of their responsibilities:

* The Office of Insurance Programs will administer new high-risk pools and their funding.
* The Office of Oversight will put in place new rules governing the insurance market and the rules regarding medical loss ratios — the percentage of revenues that health insurers will be required to spend on medical care.
* The Office of Consumer Support will collect and maintain comparative pricing data for the HHS health insurance website.
* The Office of Health Insurance Exchanges will develop the rules governing state-based health insurance exchanges, and oversee their operations.

Each of those jobs brings with it some controversy. Take the issue of medical loss ratios, a touchy subject because it limits how much insurers can spend on advertising and administrative costs. Already, some insurers have drawn criticism for recasting some of their other expenses as medical expenses. Such moves could make regulation more difficult.

The new high-risk pools are another controversial area. These pools have been developed to provide health insurance for people who currently cannot get regular private-plan coverage due to a preexisting medical condition. However, one state insurance commissioner, John Oxendine of Georgia, has already informed HHS that his state will not participate in the high-risk pool program.

“I cannot commit the State of Georgia to implement a federal high risk pool program that is part of a broader insurance scheme which I believe the Supreme Court will hold to be unconstitutional, leads to the further expansion of the federal government, undermines the financial security of our nation, and potentially commits the state of Georgia to future financial obligations,” he wrote.

The Office of Health Insurance Exchanges also has its work cut out for it. The exchanges are designed to help small-group and individual customers purchase health insurance at more affordable rates. Many hot-button questions about the exchanges remain to be decided, such as what will be included in the minimum benefit packages offered by plans in the exchange, and what the role of insurance brokers will be.

All things considered, this little-publicized office within HHS will be well worth keeping an eye on.

Joyce Frieden is a MedPage Today News Editor and blogs at In Other Words, the MedPage Today staff blog.

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