Phil Klein at AmSpec points out that the Obama administration has today issued its first set of “medical loss ratio” regulations per the Affordable Care Act. The regulations fix the share of premiums insurance companies must spend on medical care (as opposed to overhead), and are at the center of debates — most notably at McDonald’s — about whether businesses can continue to offer cheap, basic plans for lower-wage workers. Now that the regulations are in place, expect to see a lot more firms looking at leaving the individual market all together.
And of course, the regulations themselves are the product of political sleight of hand:
. . . [I]t’s no accident that the requirements were set at 85 percent [for large companies] and 80 percent [for smaller companies]. Last December, the Congressional Budget Office issued a memo saying that if the requirements were set any higher than that, health insurers would have to be considered part of the federal budget — driving up the cost estimate of ObamaCare. As the CBO put it, referencing proposals for even more stringent requirements, “this further expansion of the federal government’s role in the health insurance market would make such insurance an essentially governmental program, so that all payments related to health insurance policies should be recorded as cash flows in the federal budget.” At the time, the Cato Institute’s Michael Cannon pointed to the memo as a “smoking gun,” revealing that Democrats had deliberately hidden the true cost of ObamaCare by making sure the CBO wouldn’t factor in the cost of the private sector mandates imposed by the legislation.