The health reform law (now mostly called the Patient Protection and Affordable Care Act, or just the Affordable Care Act (ACA) requires many insurers to maintain a “medical loss ratio” of at least 85%. The medical loss ratio is the percentage of premiums which the insurer must pay out as health care. So if the premium for health insurance is $100 per month, the insurer must, on average, spend $85/month on payments for health care used by everyone insured by the company.

Naturally, health insurers are interested in maximizing the kinds of things they get to call “spending on health care”. For instance, is utilization review “spending on health care”? Generally, I would argue it is not; it is generally of little benefit to the individual person insured, but of significant benefit to the insurance company. (Utilization review is the process an insurance company uses to assess whether you still need to be in the hospital, or if you really need that MRI, or if you could manage with a less costly medication). Is there a benefit to these programs? Well, yes and no; the individual doesn’t benefit that much. The group of beneficiaries as a whole benefits some, since every dollar saved by UR is a dollar which can potentially be spent on other health care. But UR is much hated by patients and doctors, not because it is done (it’s done some useful things for length of stays, which were arguably way too long when UR started in the 80’s), but because it’s so haphazard. Everyone has their own rules, the rules are often arbitrary, or arbitrarily enforced, and the appeals process is arduous and uncertain.

The National Association of Insurance Commissioners (the group of state insurance commissioners; this is a government organization, like the association of governors, etc,) has recently come out with a guidance document which has a relatively narrow definition of “health care spending”. And unsurprisingly, the insurance companies, led by Karen Ignani (the remarkably effective president of America’s Health Insurance Plans, or AHIP), are incensed that their favorite spending categories, (investments and fraud prevention) are not counted as “health expenditures”. Naturally, they couch this in language calculated to frighten patients into calling their congresscritters: “the current proposal could have the unintended consequence of turning-back-the-clock on efforts to improve patient safety, enhance the quality of care, and fight fraud” according to Ms. Ignani.

Uh-huh. Investments did so much to improve patient safety. And fighting fraud is a cost of doing business, not a direct cost of health care. Now Ms. Ignani is a smart woman; she knows the buttons to push. But I wish they insurance companies would, just once, recognize that the exemption from anti-trust law they enjoy is at least in part a statement of the public’s faith that they will act in the public’s interest. You know, from time to time. So far their record is spotty to a kind reading. (To a fair reading it’s exploitative, in my opinion, but I’ll stick with spotty for now).