ACO, MLR Specters Haunt Providers, Employers

Here's another provision of the reform law that's sending chills down the spines of employers. It's the so-called medical loss ratio (MLR). Insurers with large group coverage plans are required to spend at least 85% of premiums on medical costs, and at least 80% of premiums for individual and small group plans starting in 2011. If insurers fall short, they will be required to give customers a rebate for the difference starting in 2012.

McDonald's—like some other employers with large numbers of low-wage employees—offers a "limited-benefit" or "mini-med" health plan. Last week McDonald's made headlines for saying that it might cut health insurance to its 30,000 employees. According to the Wall Street Journal, a McDonald's memo to federal regulators said "it would be economically prohibitive for our carrier to continue offering" the mini-med plan unless it got an exemption.

Health and Human Services, stuck between a rock (enforcing the medical loss ratio provision) and a hard place (seeing tens of thousands lose their health insurance, however meager) granted the exemption.

Political agendas aside, the most bone-chilling aspects of the healthcare reform law are the ones that can't be easily pinned down, understood, and applied.  Like the lurking possibility of antitrust violations and the MLR, they are ill-defined specters threatening to drain coffers and make zombies out of leaders.