Sen. Threatens To Revive Public Option

Sen. Jay Rockefeller, D-W.Va., threatened to resurrect his quest for a public health insurance option after failing to win a commitment from federal and state officials for regulations imposing tight control over administrative costs in premiums.

At an appearance before the Alliance for Health Reform, a group funded by the Robert Wood Johnson Foundation–and of which Sen. Rockefeller is a charter member–the senator made clear he would renew the battle for a public health insurance option if medical loss ratio mandates in the health care reform law are diluted or otherwise undermined.

Sen. Rockefeller said he will not allow health insurers to "water down" the 80-to-85 percent MLR required by permitting health care quality provisions to be defined as medical care costs.

Sen. Rockefeller warned in his comments that he agreed to include an MLR in the health reform law only as a compromise to a proposal by Sen. Charles Schumer, D-N.Y., that would have created a public option. "Implementation matters–it is the ball game," he said, noting that health insurers are looking at ways to "whittle the MLR down."

However, state insurance regulators and Jay Angoff–the point man on the issue at the U.S. Department of Health and Human Services and a former state insurance regulator–remained mum on how HHS will interpret the MLR provisions.

Mr. Angoff would only say in response to Sen. Rockefeller's opening statement that "there still remains a lot of work to be done on MLR." At the same time, he announced that under the law, HHS will be providing up to $1 million for each state and Washington, D.C. to help local governments deal with the regulations and other activities needed to implement the new law.

Speaking for state regulators, Brian Webb, manager of health policy and legislation for the National Association of Insurance Commissioners, said the NAIC wants to complete work on the complex MLR "blank" by "the end of summer, hopefully by Sept. 23."

In any case, Sen. Rockefeller's threat might be an empty one, according to Ira Loss, a health care regulatory specialist at Washington Analysis, who said that given what happened in both the House and Senate when health reform was narrowly passed, Sen. Rockefeller does not have the votes to force a public option.

In related news, Virginia Attorney General Kenneth Cuccinelli has won a chance to get a hearing on arguments that mandating all Americans to buy health insurance under the new reform law is unconstitutional. U.S. District Court Judge Henry Hudson of the U.S. District Court in Richmond, Va., ruled against Obama administration efforts to dismiss the suit–Cuccinelli vs. Sebelius.

Mr. Cuccinelli filed the suit March 23, arguing that the Patient Protection and Affordable Care Act goes beyond the outer limits of the Commerce Clause of the U.S. Constitution, which permits Congress to regulate interstate commerce, in ordering everyone to buy health insurance or face penalties. He also has argued that the federal mandate conflicts with the Virginia Health Care Freedom Act.

The defendant, U.S. Health and Human Services Secretary Kathleen Sebelius, told the court it should dismiss the suit because the section in question is the "central ingredient of a complex health care regulatory scheme," based on the belief that, at some point, every individual will need medical services and that all individuals subject to the coverage ownership requirement ought to help reduce the amount of uncompensated medical services by purchasing health coverage."

Ms. Sebelius also has argued that the law relies on the authority of Congress to use its taxing and spending power, and that the question is not yet ripe for review because the mandate will not take effect until 2014.

Judge Hudson ruled that Virginia has standing to bring a suit, that the case is ripe for review because Virginia will have to start implementing it in the near future, and that the questions about congressional authority are reasonable ones.

"While this case raises a host of complex constitutional issues, all seem to distill to the single question of whether or not Congress has the power to regulate–and tax–a citizen's decision not to participate in interstate commerce," the judge said. "Neither the U.S. Supreme Court nor any circuit court of appeals has squarely addressed this issue."

Because some authorities appear to support the arguments on both sides of the case, the court "cannot conclude at this stage that the complaint fails to state a cause of action," the judge said.