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Will lower premiums for health insurance to cover people with pre-existing conditions make the policies more attractive? We’re about to find out.

Experts agreed that high prices for the coverage created under the health care overhaul were partly to blame for anemic enrollment in the plans, which reached just 21,454 after several months. Hundreds of thousands of people had been expected to sign on.

But on July 1, the Obama administration reduced premiums by up to 40 percent in 17 states and the District of Columbia where it runs the new high-risk programs. It also encouraged other states to follow suit.

The reductions were possible because federal officials now have state-specific data that allowed them to more accurately peg the premiums to the rates for individual plans in the state, as the law requires, says Steven Larsen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services.

Another provision of the health reform law could help make the plans — which are aimed at people with medical conditions who can’t get coverage on the private individual market — even more affordable.

Under the law, starting in 2012 insurers must spend at least 80 percent of the premiums they collect on medical claims, as opposed to administration or profit, or pay rebates to consumers for the excess amount collected.

Some insurers are already reducing premiums to meet the new “medical loss ratio” requirements. (Medical claims paid are considered losses in insurance jargon.) If tough economic times continue and people cut back on medical care, experts say other insurers may follow suit. “Plans are getting nervous about how big the rebates they’re going to have to pay are,” says Timothy Jost, a law professor at Washington and Lee University who’s a consumer representative to the National Association of Insurance Commissioners.

If insurers lower premiums in the individual market to meet the law’s new MLR requirements, that could be good news for the PCIP programs, whose rates are supposed to be no higher than standard rates in a state’s individual market.

Talk about further reductions can wait for another day. “It’s possible,” that the medical loss ratio requirements might further depress premiums in the PCIPs, says Larsen. However, he adds, “I wouldn’t care to speculate about that.”

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THOMAS MORE LAW CENTER v. OBAMA, Cite as 108 AFTR 2d 2011-XXXX

This is barely on topic for me, but I posted on the original case back in October.  Mainly I can’t resist the title.  Things didn’t work out so well for Thomas More when he took on Henry VIII, so we wonder if he’ll keep his head as he takes on another head of state. Several individuals with the support of the Center are challenging the provision of the Affordable Health Care Act that will impose a tax penalty on people who fail to purchase health insurance.

Now that requirement doesn’t kick in until 2014, so there had to be a pretty tedious argument about whether there should be an argument. That is whether these people had “standing”.  I don’t have a lot of patience with this lawyerly stuff, but I suppose  that the government had something of a point when it argued that these people were getting prematurely excited.  2014 isn’t for a while and there is a decent chance that the law will change by then.  Or if we are really lucky, you’ll die or move out of the country.  Then to really complicate things one of them broke down and bought health insurance. The Court indicated though that it would be better to have the argument sooner rather than later:

In view of the probability, indeed virtual certainty, that the minimum coverage provision will apply to the plaintiffs on January 1, 2014, no function of standing law is advanced by requiring plaintiffs to wait until six months or one year before the effective date to file this lawsuit. There is no reason to think that plaintiffs’ situation will change. And there is no reason to think the law will change. By permitting this lawsuit to be filed three and one-half years before the effective date, as opposed to one year before the effective date, the only thing that changes is that all three layers of the federal judiciary will be able to reach considered merits decisions, as opposed to rushed interim (e.g., stay) decisions, before the law takes effect. The former is certainly preferable to the latter, at least in the current setting of this case.

Even the guy who bought insurane was going to be forced to maintain it after 2014.  So everybody is left standing.

Once they decided the subject was worth discussing, they had to go on for a while to come to a conclusion.  It basically turns on the Commerce Clause of the Constitution.  The argument against the insurance requirement is that it is hard to see how somebody is engaging in interstate commerce by not doing something, like not buying health insurance.  The requirement to buy  health insurance is, however, an essential component of the whole plan, which does affect interstate commerce:

By regulating the practice of self-insuring for the cost of health care delivery, the minimum coverage provision is facially constitutional under the Commerce Clause for two independent reasons. First, the provision regulates economic activity that Congress had a rational basis to believe has substantial effects on interstate commerce. In addition, Congress had a rational basis to believe that the provision was essential to its larger economic scheme reforming the interstate markets in health care and health insurance.

The other reason that I can’t resist writing about this case is that it let’s me use one of my favorite quotes.  As we observe the mental machinations in this litigation, we can be heartened by the words that Robert Bolt wrote for Thomas More in A Man For All Seasons:

God made the angels to show Him splendor, as He made animals for innocence and plants for their simplicity. But Man He made to serve Him wittily, in the tangle of his mind.

WASHINGTON ? A federal appeals court Wednesday upheld the government’s new requirement that most Americans buy health insurance, in the first decision by a U.S. appeals court on the centerpiece of the Obama-sponsored health-care overhaul.

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  By J. Scott Applewhite, AP

  President Obama signs the health care bill in the East Room of the White House.

By J. Scott Applewhite, AP

President Obama signs the health care bill in the East Room of the White House.

The ruling by the Cincinnati-based U.S. Court of Appeals for the 6th Circuit gives the administration a significant victory. Yet the 2-1 panel decision marks what is likely to be the first in a series of appeals court rulings in upcoming months. Ultimate resolution of the politically charged dispute is likely to come from the U.S. Supreme Court sometime next year.

Wednesday’s decision, however, is the most significant to date, because it is the first by an appeals court and constitutes the first time that a Republican-appointee has voted to uphold the law.

Prior rulings were issued by district court judges, on the first rung of the U.S. judiciary, and in all of those, GOP-appointed judges had struck down the mandate that Americans buy insurance by 2014 and Democratic-appointee had found it constitutional.

In Wednesday’s case, Judge Boyce Martin, named by Democratic President Jimmy Carter, and Judge Jeffrey Sutton, an appointee of Republican President George W. Bush, joined together for the panel majority to declare the individual-mandate provision a valid use of congressional power.

Sutton’s stance was additionally important because he is one of the most high-profile conservative judges nationwide. A former law clerk to Supreme Court Justice Antonin Scalia, Sutton was, before joining the 6th Circuit in 2003, at the vanguard of advocates arguing for limited federal power and confined readings of constitutional rights. He served in the late 1990s as Ohio’s state solicitor general.

The overriding question in the health-care litigation has been whether Congress, after finding that the uninsured pass on billions of dollars in costs to people who carry insurance, exceeded its commerce power by requiring almost everyone to purchase insurance.

A focal point of the legal arguments has been whether a person’s decision not to buy insurance is a kind of economic activity that constitutes commerce, or, if it is a kind of inactivity beyond the reach of Congress.

“The minimum coverage provision regulates activity that is decidedly economic,” Judge Martin wrote as he took the lead on Wednesday’s decision in Thomas More Law Center v. Obama. “Consumption of health care falls squarely within (Supreme Court precedent’s) definition of economics, and virtually every individual in this country consumes these services.”

Martin concluded his part of the opinion by saying, “Congress had a rational basis for concluding that the minimum coverage provision is essential to the Affordable Care Act‘s larger reforms to the national markets in health care delivery and health insurance.”

Sutton agreed that the individual mandate falls within Congress’ power to regulate commerce, in an opinion that emphasized the activity behind making an insurance choice.

“No one is inactive when deciding how to pay for health care,” he wrote.

Taking on some of the larger policy questions that have led congressional Republicans to continue trying to roll back the law, Sutton wrote, “The basic policy idea, for better or for worse (and courts must presume better), is to compel individuals with the requisite income to pay now rather than later for health care. Faced with $43 billion in uncompensated care, Congress reasonably could require all covered individuals to pay for health care now so that money would be available later to pay for all care as the need arises.”

Sutton noted that critics have argued that if the individual mandate is upheld, Congress would have the leeway to compel other purchases, including, he wrote for example, health club memberships.

But, Sutton wrote, “In most respects, a mandate to purchase health insurance does not parallel those other settings or markets.”

Sutton concluded by looking back at great debates over Congress’ power and said, “Today’s debate about the individual mandate is just as stirring, no less essential to the appropriate role of the National Government and no less capable of political resolution. Time assuredly will bring to light the policy strengths and weaknesses of using the individual mandate as part of this national legislation, allowing the peoples’ political representatives, rather than their judges, to have the primary say over its utility.”

Dissenting was Judge James Graham, an appointee of President Reagan. He said Congress intruded on the business of the states with the mandate.

The two other appeals courts that already have heard similar disputes are the Richmond-based 4th Circuit and Atlanta-based 11th Circuit. The U.S. Court of Appeals for the District of Columbia Circuit will hear an appeal in early fall.

The health-care overhaul, which was immediately challenged after its spring 2010 passage, attempts to make health care coverage more affordable — extending insurance to 32 million Americans — and to reduce the current uncompensated care that causes higher premiums for people who do carry insurance.

Wednesday’s case in the 6th Circuit traced to Michigan when the conservative Thomas More Law Center challenged the law. Among the cases still pending is one brought by 26 states that contend Congress lacked the authority to force people to buy insurance.

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The administration says the survey will address a “critical public policy problem”: the increasing shortage of primary care doctors, including specialists in internal medicine and family practice. It will also try to discover whether doctors are accepting patients with private insurance while turning away those in government health programs that pay lower reimbursement rates.

Federal officials predict that more than 30 million Americans will gain coverage under the health care law passed last year. “These newly insured Americans will need to seek out new primary care physicians, further exacerbating the already growing problem of P.C.P. shortages in the United States,” the Department of Health and Human Services said in a description of the project that it submitted to the White House.

Plans for the survey have riled many doctors because the secret shoppers will not identify themselves as working for the government.

“I don’t like the idea of the government snooping,” said Dr. Raymond Scalettar, an internist in Washington. “It’s a pernicious practice — Big Brother tactics, which should be opposed.”

According to government documents obtained from Obama administration officials, the mystery shoppers will call medical practices and ask if doctors are accepting new patients and, if so, how long the wait would be. The government is eager to know whether doctors give different answers to callers depending on whether they have public insurance, like Medicaid, or private insurance, like Blue Cross and Blue Shield.

Dr. George J. Petruncio, a family doctor in Turnersville, N.J., said: “This is not a way to build trust in government. Why should I trust someone who does not correctly identify himself?”

Dr. Stephen C. Albrecht, a family doctor in Olympia, Wash., said: “If federal officials are worried about access to care, they could help us. They don’t have to spy on us.”

Dr. Robert L. Hogue, a family physician in Brownwood, Tex., asked: “Is this a good use of tax money? Probably not. Everybody with a brain knows we do not have enough doctors.”

In response to the drumbeat of criticism, a federal health official said doctors did not need to worry because the data would be kept confidential. “Reports will present aggregate data, and individuals will not be identified,” said the official, who requested anonymity to discuss the plan before its final approval by the White House.

Administration officials said the survey would yield an enormous benefit to the government while imposing an extremely limited burden on doctors.

The new health care law includes several provisions intended to increase the supply of primary care doctors, and officials want to be able to evaluate the effectiveness of those policies.

Federal officials said the initial survey would cost $347,370. Dr. Hogue said the money could be better spent on the training or reimbursement of primary care doctors.

Most doctors accept Medicare patients, who are 65 and older or disabled. But many say they do not regard the government as a reliable business partner because it has repeatedly threatened to cut the fees paid to doctors treating such patients. Congress usually steps in at the last minute to avert such cuts.

In many parts of the country, Medicaid, the program for low-income people, pays so little that many doctors refuse to accept Medicaid patients. This could become a more serious problem in 2014, when the new health law will greatly expand eligibility for Medicaid.

Access to care has been a concern in Massachusetts, which provides coverage under a state program cited by many in Congress as a model for President Obama’s health care overhaul.

In a recent study, the Massachusetts Medical Society found that 53 percent of family physicians and 51 percent of internal medicine physicians were not accepting new patients. When new patients could get appointments, they faced long waits, averaging 36 days to see family doctors and 48 days for internists.

In the mystery shopper survey, administration officials said, a federal contractor will call the offices of 4,185 doctors — 465 in each of nine states: Florida, Hawaii, Massachusetts, Minnesota, New Mexico, North Carolina, Tennessee, Texas and West Virginia. The doctors will include pediatricians and obstetrician-gynecologists.

The calls are to begin in a few months, with preliminary results from the survey expected next spring.

Each office will be called at least twice — by a person who supposedly has private insurance and by someone who supposedly has public insurance.

Federal officials provided this example of a script for a caller in a managed care plan known as a preferred provider organization, or P.P.O.:

Mystery shopper: “Hi, my name is Alexis Jackson, and I’m calling to schedule the next available appointment with Dr. Michael Krane. I am a new patient with a P.P.O. from Aetna. I just moved to the area and don’t yet have a primary doctor, but I need to be seen as soon as possible.”

Doctor’s office: “What type of problem are you experiencing?”

Mystery shopper: “I’ve had a cough for the last two weeks, and now I’m running a fever. I’ve been coughing up thick greenish mucus that has some blood in it, and I’m a little short of breath.”

In separate interviews, several doctors said that patients with those symptoms should immediately see a doctor because the symptoms could indicate pneumonia, lung cancer or a blood clot in the lungs.

Other mystery shoppers will try to schedule appointments for routine care, like an annual medical examination for an adult or a sports physical for a high school athlete.

To make sure they are not detected, secret shoppers will hide their telephone numbers by blocking caller ID information.

Eleven percent of the doctors will be called a third time. The callers will identify themselves as calling “on behalf of the U.S. Department of Health and Human Services.” They will ask whether the doctors accept private insurance, Medicaid or Medicare, and whether they take “self-pay patients.” The study will note any discrepancies between those answers and the ones given to mystery shoppers.

The administration has signed a contract with the National Opinion Research Center at the University of Chicago to help conduct the survey.

Jennifer Benz, a research scientist at the center, said one purpose of the study was to determine whether the use of mystery shoppers would be a feasible way to track access to primary care in the future.

The government could survey consumers directly, but patients may not accurately recall how long it took to get an appointment, and their estimates could be colored by their satisfaction with the doctor, researchers said.

Two weeks ago, the international consulting firm McKinsey Company threw itself into the rancorous partisan debate over the 2010 health care overhaul by publishing research that appeared to predict that many employers would dump their health insurance plans when the new law fully took effect in 2014. The new law offers subsidies to help low-income people purchase health insurance from state-run exchanges, and it also penalizes companies with more than 50 employees when they fail to offer those employees affordable coverage. As McKinsey notes, paying the penalty will cost less than providing the insurance, so companies could profit by socializing that cost.

Nonetheless, the finding was surprising, and controversial, because, as The Agenda reported in April 2010 (and also in 2009), most economists say they believe that a mix of market pressures, a tax incentive and the penalty will deter all but a relative handful of employers from casting off their health insurance plans. The Obama administration slammed McKinsey’s apparent prediction, and Senate Democrats demanded that the consultants release the proprietary methodology behind it. For several days, McKinsey refused.

I say “appeared to predict” because on Monday, when McKinsey finally released the methodology, it came with a statement insisting that the survey had done no such thing. Rather, “it captured the attitudes of employers and provided an understanding of the factors that could influence decision-making related to employee health benefits.” Two paragraphs later, the statement continued, “We understand how the language in the article could lead the reader to think the research was a prediction, but it is not.”

The Agenda understands, too: The original article was titled “How U.S. Health Care Reform Will Affect Employee Benefits.” Its second sentence declared, “While the pace and timing are difficult to predict, McKinsey research points to a radical restructuring of employer-sponsored health benefits following the 2010 passage of the Affordable Care Act.” One word that appears frequently throughout the article is the future-tense “will,” not the conditional “could” — as in, “30 percent of employers will definitely or probably stop offering E.S.I.” — employer-sponsored insurance — “in the years after 2014.” (The Times reported Tuesday that Democrats were not impressed by McKinsey’s explanation.)

Still, the distinction between making predictions and capturing present attitudes — or, really, aspirations — is important. It should come as no surprise that employers, given their choice, would rather focus on their business than go through the administrative hassle of arranging health insurance for their work force. Companies probably wouldn’t offer it now if their employees didn’t demand it and weren’t willing to trade away a portion of their wages to have it. (Economists say that, contrary to broad public perception, employers don’t pay more to offer health insurance. Instead, insurance is merely a component of total pay — and employers that stopped offering it would have to provide some other, well, compensating compensation.)

Strikingly, the overall impression from the McKinsey article is that employees’ views count for little in the coming debate over whether employers will provide health care — or that they’ll accept whatever employers choose to offer. Here, for example, are two findings from McKinsey, based on separately conducted consumer research: 85 to 90 percent of employees would still work for their current company even after it dropped health insurance coverage, but only 60 percent would demand increased compensation to make up for it. That may, or may not, be true in 2011 — we’ll leave it to others to assess the soundness of McKinsey’s survey techniques — when the prospect of an employer dropping health insurance is too abstract for many in the work force to think seriously about what their coverage is worth. But who can say how they’ll think in 2014, as the new system is put in place — accompanied, no doubt, by extensive media coverage?

Employers might see an opportunity to shed their insurance burden once 2014 arrives, but the system that’s coming is so new and different — and complicated — that it seems foolish to presume this will happen right away, if at all. The new law could ultimately dismantle the underpinnings of workplace-provided insurance, but employees, too, will probably have something to say about this. It could take years, maybe even a generation, for people to grow comfortable with buying insurance on their own, and if they continue to insist on insurance from their employer, or prospective employer, in the meantime, companies are likely to comply. That’s what happened in Massachusetts after that state passed its own health care reform in 2006, as health economist Jonathan Gruber told The Agenda the last time we looked at this. There, employer-sponsored coverage actually increased.