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Feds Must Watch for Unhealthy Insurance Moves

Hold onto your health plan. In an effort to
get ahead of the new restrictions and regulations of health care reform,
insurers are taking steps to increase their profits now.

It's like a rerun of the credit-card industry's behavior last year,
when it implemented steep interest rate increases right before new
regulations.

The health care changes are also designed to maximize industry
benefits at the expense of consumers. The Department of Health and Human
Services needs to make sure that they don't get away with it.

One of the earliest offenders was WellPoint, one of the country's
largest insurance companies. Under the new health care law, insurers
must spend 80 percent of premium dollars on medical care. In January -
well ahead of the reform's passage - WellPoint began reclassifying some
of their administrative expenses as "medical spending." The company even
bragged about it to its investors.

Meanwhile, the Department of Health and Human Services and the
National Association of Insurance Commissioners haven't even finished
writing the definition of "medical spending" as it will exist under the
health care reforms. So this is clearly a pre-emptive move by WellPoint,
to make its own classification. It's unfair and unseemly. And if
WellPoint's allowed to get away with it, every other health insurer will
do the same.

And that's just one example. As the new regulations become more
clear, we're likely to see more and more of this activity.

"These are things we're going to see fairly quickly and they will set
a tone and a course for the health reform," said Judy Dugan, research
director of the advocacy group Consumer Watchdog. "Even though reform
has already been passed, the health care industry is lobbying hard to
get their own definitions passed into code, and to have a say in writing
many of the other regulations. The only answer for consumers is that
the Department of Health and Human Services has to insist on the most
expansive definition of the law."

Otherwise, consumers can also expect pre-emptive premium increases in
the near future, and maybe even a change in their jobs. Professor Mark
Pauly, a health economist at the Wharton School at the University of
Pennsylvania, said that he could even see large companies restructuring
their firms to get ahead of the new mandate for large employers to buy
insurance for their employees.

"Small firms get more favorable treatment," Pauly said. "I could
anticipate some companies trying to spin-off some of their functions."

It remains to be seen whether this behavior is in keeping with the
letter of the new health care laws. But it's certainly in violation of
the spirit. The Department of Health and Human Services needs to step in
now.