By Evan Falchuk

Like Ezra Klein, smart people keep saying foolish things about the health insurance business.  This time it’s a pair of bloggers talking about the largest expense that health insurers face: their “medical loss ratio.”

According to Richard Dale at the Venture Cyclist:

[W]hy do they call it Medical Loss Ratio? Why is looking after me (or you) called “Medical Loss”, when the whole point of a health care system is to look after me (or you)?

Sigh.

Alan Katz, one of the leading health insurance bloggers, surprisingly links to this with approval, saying “words matter.”

The problem: the word “loss” is probably one of the four oldest words in the insurance industry.  I’d say the others are probably “premium,” “commission,” and “profit.”

Should we start outlawing these words, too?

Let me answer Richard’s question:

The word “loss” in insurance dates back at least to the 17th century, when the first maritime insurance contracts started being underwritten at Lloyd’s Coffee House in London.  A “loss” refers to the cost to an insurer when the insured event takes place.

Imagine I insure a ship that’s crossing the Atlantic.  If it sinks, my “loss” is the cost of the ship.  If I sell home insurance and a tree falls on the roof of the house, my “loss” is what it takes to fix the roof.  And if I insure someone’s health, my “loss” is how much money I pay if the person gets sick.

“Loss,” then, is just the word used to describe these kinds of costs.  Insurers have all kinds of other expenses, and so they differentiate the costs of paying for the sunken ship from the costs of their offices and salaries and other things in this way.

Now, they need separate out their expenses like this this for a number of reasons.

The most important is that how many dollars they spend on paying for insured events is critical for calculating how much they have to charge for coverage.  The ways insurers do this is by calculating – and paying very close attention to – their “loss ratio.”  That’s the the quotient you get when you divide these costs by the amount of premium collected.  In health care you often hear this called “medical loss ratio,” but you just as often hear it called just “loss ratio” or “loss experience.”

So are Richard and Alan right that these words don’t make sense since “the whole point of a health care system is to take care of you (or me)?”  Put differently, is there something sinister in the use of the words “medical loss ratio”?

Of course not.  No matter how you organize a health care system, someone, somewhere, is going to have to pay attention to how much money it costs when someone gets sick. If those people come from the insurance industry, the accounting business, or from the government, they’re going to call those costs “medical losses.”  The term isn’t meant to convey any idea beyond that.

We could, of course, decide to call medical losses something different, but it wouldn’t make a whit of difference as to what they actually are.

What’s in a name? That which we call a rose by any other name would smell as sweet.

UPDATE: For a smart take on medical loss ratios, read David Williams’ latest post at the Health Business Blog.

By Evan Falchuk

The Healthcare Economist points to a study from late last year about the impact of state insurance regulation on the price of health insurance policies.   It’s a subject I’ve blogged about many times before (like here, and here and here and here).

The study tried to quantify the impact of the types of mandates used by states in their insurance markets: guarantee issue, community rating, mandated benefits, and so-called “any willing provider” rules.

It found that all of these increased the price of health insurance, but there were limitations in the study.  They had a “rich data set based on actual insurance contracts” only for guarantee issue and community rating mandates on individual policies.  Still, this is a big segment of the market – perhaps 30 million people buy insurance in this way – and the data are revealing.

But first, what do these terms mean?

“Guarantee issue” means that an insurance company can’t deny you coverage because of a pre-existing condition.  So if you are sick you can buy a policy and the company has to accept you.  “Community rating” means that an insurer can’t charge you more because you are sick, or because of your age or gender.   Different states put different spins on these concepts, or don’t have them at all.  They typically exist together as part of one regulatory scheme.  They are both part of reform bills in Congress.

According to the study, community rating increased individual premiums by as much as 17%, and family premiums by as much as 33%.  Guarantee issue increased premiums by well over 100% for individuals, and by as much as 191% for families.

Why does this happen?

If the law says insurers have to treat every person the same, without taking into account whether they’re sick or healthy, young or old, a rational insurer will do some rational things.  For example, it will assume disproportionate numbers of people who buy a policy from them will be sick and old.

Of course, when they do this, the product becomes expensive, and young, healthy people start to wonder if they should even buy it in the first place.  After all, they don’t really need insurance, right?  They’re young and healthy and can wait to buy insurance when they get sick.  So, the insurers’ assumptions on the age and health of their portfolios come true, or are worse than expected.  Coupled with the overall rise in the cost of health care, insurers now push through new rounds of price increases, which, in turn, create more uninsured people.  It is a very nasty cycle.

Which brings us to reform, circa 2009.

As Congress debates the politics of reform, there seems to be a lack of recognition of what makes health insurance so expensive in the first place.  The great irony of reform is that lurking in the bills our representatives have written are precisely the kind of regulations that got us here in the first place.

By Evan Falchuk

Blue Cross Blue Shield of Massachusetts and Caritas Christi Health System are announcing a new agreement that some suggest may be a model for the rest of the country.

Under it, the non-profit insurer will stop paying the non-profit hospital on a fee-for-service basis for certain insureds:

Under the deal expected to be announced Friday, Caritas . . . will be paid to take care of about 60,000 Blue Cross members in its new program — whether or not they get sick. Caritas will use some of the payments for preventive services to help keep patients healthy. If Caritas can keep health-care costs under a certain budget, it can make a profit. But if health-care costs go over the agreed-on amount, Caritas is on the hook. . . . . Blue Cross is adding a carrot: If doctors and hospitals can meet certain quality targets, they can earn a bonus of as much as 10% on the value of the deal.

It sounds like a new approach to health costs.  But it reveals more about how the same old ways of controlling health care costs continue to thrive.

Here’s what I mean.

The model of the last few decades has been this.  Insurers and hospitals negotiate rates to pay for care.  The bigger and more important the hospital, the more leverage it has over the insurer.  The bigger and more important the insurer, the more leverage it can have back over the hospital.  So in Massachusetts, like other states, hospitals have consolidated into a small number of big hospital “systems.”  In turn, the health insurance business has become dominated by a small number of insurers, chief among them Blue Cross.

Simplified, here’s how these negotiations go.  The insurer threatens that if it doesn’t get what it wants, it will change its plan designs to make it less likely that patients will seek care at the hospital.  The hospital, says if it it doesn’t get what it wants, it will stop accepting the insurer’s customers.  It’s a game of high-stakes chicken, but deals usually get made.  They typically involve the hospitals agreeing to lower rates of pay for more routine care, and preserving higher rates of pay for more specialized care.  It’s a set up that encourages big hospital systems to get bigger, so they can capture more patients, and more focused on highly specialized care.  It also makes it far more likely that smaller insurers will end up paying more for the same care at the same hospital, as the hospitals try to offset lost revenue from them.

So what does this have to do with the new deal between Blue Cross and Caritas?

Well, less significant hospital systems like Caritas (which has very good doctors but has been notoriously troubled in recent years) have very little negotiating leverage with the big insurance companies.  For them, the game isn’t so much getting a good rate of pay for their services as it is getting patients through the door.  And so they need to figure out ways to get the insurer to encourage patients to go there.  What better way to do it than to enter into a high-profile new contract with the biggest insurer in the state?

Now, take a look at the numbers.  If I’m doing the math right, Caritas is going to get about $6,000 per insured per year.  With state Medicaid payments running at about $5,500 per insured, these Blue Cross patients not particularly interesting, financially.  Unless, that is, the program works as expected and Blue Cross ends up changing its plan design to encourage more people to go to Caritas for care, as opposed to the other major Massachusetts hospital systems.  And you know Blue Cross would love to be able, one day, to use its deal with Caritas as part of its negotiations with those other systems.

“It’s a bet,” said Caritas Chief Executive Ralph de la Torre.

That, it is.  But some new paradigm for health care?  Not so much.

By Evan Falchuk

The strangely out-of-touch comments by proponents of reform legislation continue.

Yesterday, Christina Romer, the head of the President’s Council of Economic Advisers was asked about the proposed excise tax on so-called “Cadillac” health plans.  Romer said:

Part of the idea of how that is going to work is precisely because it does empower consumers. It empowers each of us to have an employer-sponsored plan to call our HR office and say, ‘Would you negotiate harder? Would you think about (whether this) is the most efficient plan out there, because I don’t want my plan paying an excise tax.’ So I think that’s something that is very much empowering consumers.

It’s a bizarre statement.  Roemer has impressive academic credentials, but this kind of statement betrays a profound ignorance of how employers actually buy health benefits.  She’s not the only one with such strange beliefs.

So, let me make it simple.

Companies across America use skilled and experienced benefits professionals to design and implement their health plans.  The bigger the employer the better they are at this.  In fact, big employers are such smart negotiators that they manage to get the services of the insurance companies without paying them a dime for health insurance.  It’s true: they just use the insurance companies to mechanically pay for the cost of their employees’ care, which comes out of the pocket of the employer.

Now, the smaller an employer is, the more difficult it is.  If you’re a company with 20 employees, your problem isn’t whether you are any good at negotiating.  It’s that you probably live in a state where one or two insurance companies dominate the market.  Your choices are limited, and because you’re too small to self-insure, you need to buy insurance from one of them.

But it’s worse than that.  State laws make it so that even if you were to try to “negotiate harder” (whatever that means), there isn’t much the insurance company is allowed to do.

So what is Professor Romer talking about?  Frankly, I have no idea.  So many reform proponents in Washington have never run a business or designed a benefit plan, so I’m becoming less and less surprised when they come to strange conclusions about these things.  But what doesn’t help is that they seem to prefer to spend so much time behind closed doors in Washington, or on TV, and so little time out talking to people actually in this business to see what works and what doesn’t.

This is hubris.  And it bodes very ill for the likelihood that plans coming out of Washington are going to make things better and not worse.

By Evan Falchuk

Inside Higher Ed notes an important oversight in the Baucus health care plan.  It seems that the proposal could eliminate college and campus health plans.  According to Jim Turner, President of the American College Health Association:

Congress simply isn’t thinking about college students’ health care.  They’re not trying to be malicious, I don’t think, but the legislation could unintentionally be eliminating student health insurance programs.

Forgetting about college students was probably a mistake.  But I’m not sure we should be too surprised.  There’s an “experience gap” when it comes to the insurance market in Congress – the states have been responsible for regulating it for decades.  And if you are trying to take on a big, complicated subject without much experience at dealing with it, you should be expected to make some silly mistakes.  Which of course begs the question of what else has been overlooked, or what other important, unintended consequences lurk in the reform plans.

But the experience gap isn’t limited to Congress.

Ari Matusiak, a law student and founder of a reform advocacy group says that when it comes to coverage, students ought to just. . . eat cake. . . I mean, be covered under their parents’ health plans.  It’s why he he supports an effort by Speaker of the House Nancy Pelosi to require that young people be allowed to stay covered under their parents’ plans until age 27.  According to Matusiak:

If there’s any provision that matters most to college students, it’s that one.  Most college students are covered by their parents’ plans and want to be covered under those plans since they come with little or no cost to them.

John Belushi couldn’t have said it any better.  Still, I suppose it’s reasonable to allow kids to stay on their parents’ plans past the age at which they stop being kids.  In fact, a large number of states already allow this.   But not all students are equal.

For example, consider a student from Massachusetts who goes to college in California.  If his parents are well-off and have a “Cadillac”-style PPO health plan, the coverage will work great in California.  Going to the doctor will be just like it is at home.  But what if they’re not so well-off ?  What if the student’s parents have a low-cost HMO plan?  The student seeking medical care in California is going to face big out-of-network co-pays and deductibles for every single doctor he sees.  He may even find that his care isn’t covered at all.  So much for “little or not cost.”

Now, you might say that this is an argument for a public option, and maybe it is.  Or maybe it’s an argument for limiting out-of-network costs for students.  Or, maybe, it’s an argument for making sure students have the choice of getting insurance like they’re get it now.  It’s probably an argument for any number of other possible reforms.

I don’t pretend to know the right answer, or even all the right questions.  In the rush to reform, though, our representatives in Congress seem to have decided it doesn’t matter that much.

Is it really a good way to reform our health care system?

By Evan Falchuk

In the rush to reform health care, something very important has been overlooked.  Central to the major reform proposals is perhaps the most significant change in insurance regulation since World War II.  Congressional leaders and the President have made clear in their actions (if not their sales pitch) that they want the federal government to dominate the regulation of the U.S. insurance market.

Last week in Forbes, Grace-Marie Turner argued against this direction.  She uses the example of Utah’s “Health Insurance Exchange” to make her point (readers of the See First blog will have heard about the Utah Exchange when I blogged about it in March).

Says Turner:

Because it’s working so well, one might argue that the Utah Exchange should be replicated at the national level. But the Exchange has been successful because Utah lawmakers, led by House Speaker David Clark, were able to create a market-based program tailored to the unique needs of their residents.

It’s not clear what “unique needs” Utahns face that people in other states do not.  But at least she is making the argument you would expect to hear from more state insurance regulators.  Namely, that they know their states and their markets better than anyone and think it is bad public policy to sweep away the regulatory structures they have built over many decades.  It’s a fair point, and it’s a discussion we ought to be having openly as part of the reform debate.

Still, embedded in her critique of a bigger federal role is actually an argument against state insurance regulation.  She opposes the idea of Congress being in charge of rules on acceptable insurance coverage.  She worries they will come up with “limited options of costly, impersonal, one-size-fits-all programs dominated by benefit mandates and pushed by lobbyists and special interest groups, not consumers.”

But she seems to be missing something:  health insurers already face nearly 2,000 coverage mandates, created by state legislatures.  So is she against the whole notion of benefit mandates?  Or is it that she prefers her lobbyist-designed one-size fits all programs to be mandated at the state, not federal level?

There aren’t easy answers to these questions.  Ms. Turner is a noted health care expert, so I suspect she has strongly held views on the subject.  Still, very few people seem interested in engaging in this debate.

So, what do you think?  Should insurance regulation happen at the state, or federal level?  Should states and the federal government mandate coverages, or leave it to the market to sort out?

UPDATE: Some faint grumblings of dissent on federal insurance regulation here.

By Evan Falchuk

Joe Biden unveiled a White House study on the rise of health insurance premiums.  He pressed for consumer protections the President wants to see in any reform legislation.  Among these are a pledge to pass a law that “ends exorbitant out-of-pocket expenses, deductibles or co-pays.”  Presumably this is meant to address worries many feel over the growth of high-deductible health plans.

The St. Petersburg Times looked into it to find out what this pledge means, in practical terms.  David Axelrod at the White House pointed them to the proposed House legislation, which would create limits on out-of-pocket expenses, deductibles and co-pays of $5,000 a year for an individual, and $10,000 a year for a family.

It sounds like they’re drawing a line in the sand.  But how does it compare to existing law?

Well, for a plan to qualify as a “high deductible health plan” for federal tax law purposes, it has to have a maximum limit on annual deductible and out-of-pocket medical expenses.  For 2009, that amount is $5,800 for an individual, and $11,600 for a family.

I guess the line between “exorbitant” and “not exorbitant” is somewhere between $5,000 and $5,800.

But it raises another question:

How does the strident rhetoric against insurance companies measure up against what’s actually being proposed?

The issue of high deductibles is a good example.

Although plans with high deductibles may not be appropriate for people with lower incomes or those with chronic illnesses, a high deductible plan can work well for young, healthy people who are unlikely to claim on their insurance.  They can be especially good for employers, many of whom have found that when implemented the right way, they can lead to significant improvement in health care costs.

On the other hand, for the insurance company, a high deductible plan is not so good.

A young, healthy person paying $2,000 a year for a policy he never claims on is far less appealing than that same young, healthy person paying $6,000 a year for a policy he never claims on.  This is true even if the insured is sick – as the insurer you’d rather collect the extra premium one way or the other.

So what does this have to do with the promise to end “exorbitant” out of pocket expenses?

I suspect the insurers want to make sure that if there is going to be a federal mandate to buy health insurance that as many people as possible buy the lowest deductible, highest cost policy the market will bear.  Some of the maneuvering in Congress around premium levels and benefit packages surely looks like it is designed to calibrate exactly where that optimal price point is.

Are the health insurers companies playing the role of the villains in the health care reform sales pitch? Yes – but in real life, the story seems to be very different.

The insurers aren’t against these bills – the opposite, in fact.  Their stock prices are up, likely because, as the Vice President said yesterday, reform promises to bring them a “bounty” of new customers.  The more you read of reform proposals, the more favorable they seem to the insurers.

As a wise man once said, don’t believe the hype.

By Evan Falchuk

Last week, the Senate Finance committee finally released the initial description of Senator Baucus’ long-awaited “America’s Healthy Future Act.”

There is a lot to digest in the 223 pages of text, and others have given good summaries of the high points.

Here are my “quick six” reactions to it.

1.  It’s a win for big insurance companies.

First, Senator Baucus allows for  “national plans,”  a new type of insurance that may be sold in multiple states at the same time.  The only companies that can really take advantage of this are the big plans that have a presence in multiple states.  Second, the federal mandate to buy insurance means tens of millions of new customers.  Since these same big insurers already dominate their markets, they are poised to scoop them up.  Third, a plan to create a new, not-for-profit, government-sponsored reinsurance company means that although insurers won’t be able to deny coverage for pre-existing conditions, they can put the cost of the sickest insureds on to the government.  How else do I know it’s a win for the big insurers?  In the last few weeks, as the Finance Committee plan has been coming into focus, the average stock price of the biggest health insurers has gone up nearly 7.5%.

2.  The wellness incentive programs won’t work.

Senator Baucus wants incentives for Medicare beneficiaries to improve their health, saying we should target high blood pressure, high cholesterol, smoking, obesity, diabetes and “falls.”  He’s right:  these problems lead to hundreds of billions of dollars in avoidable health care costs.  But he only wants to spend $20 million a year on it.  And he doesn’t want to start until January 2011.  The paltry sums and late start make even less sense when you realize that wellness incentive programs are one of things that have worked for major employers as a way to improve employee health and control health care costs.

3.  In America, no one should….get more than $8,000 a year worth of health benefits.

Starting in 2013, there would be a 35% excise tax on any health benefits worth more than $8,000 to an individual, and $21,000 to a family.  Here’s how it works:  add up the premium value of your health insurance, dental insurance, vision coverage, and supplementary health benefits.  Add in any money your employer gives you in a tax advantaged account like an FSA.  If the total is more than $8,000, your employer has to pay 35% on the difference.  It’s not clear why they picked $8,000.  But if current trends continue, average health insurance premiums could be close to $8,000 a year by then.  Are they trying to force employers to stop providing health benefits?

UPDATE: Today’s Wall Street Journal says that Senator Baucus is already planning to raise the limits above $8,000 / $21,000.

4. Why take $4 billion a year out of the medical device market?

Senator Baucus creates a $4 billion annuity from people who make or import medical devices.  Four billion dollars is a small amount of money for the federal government, but in terms of what these companies could do with $4 billion a year in research and development it’s a lot.  Why take that money away from this important industry?  The good news: if you make medical devices for animals, you’re not subject to this fee (seriously).

5.  These are the dying days of state insurance regulation.

The Baucus plan doesn’t dispense with America’s system of state-by-state insurance regulation, but in health insurance it comes close.  The “national plan” is just one piece of the story.  To participate in one of the state insurance exchanges Baucus creates, an insurer would have to provide one of four types of products, designed at the federal – not state – level.  He directs state regulators to create new, uniform standards for participation in these exchanges, which would pre-empt state law.  He leaves the state insurance regulators in place, but mostly as a kind of local insurance police force.  The days of state legislatures creating thousands of health insurance mandates would be over, with that role being taken over by the federal government.  But how long will it be until insurers in other lines of business ask the federal government for national rules for their products, too?  And what do the state regulators think of all of this?

6.  Great news for health care bloggers: this is a long way from being done.

As of Friday, there had been 564 amendments proposed to the Baucus plan.  So this shouldn’t take long.  Senator McCaskill thinks it won’t be until Christmas.  It’s hard to believe a lot of people thought this could be done by August 1.

By Evan Falchuk

The politicization of everything to do with health care reform continues.

In today’s Wall Street Journal, Fox News contributor Judge Andrew Napolitano writes about the President’s health care reform plan. He claims it is “unconstitutional at its core.”

Napolitano is a former state court judge, so I respect his credentials as a fellow member of the bar. But a first year law student could demolish most of Napolitano’s argument. And that same first year student, having done some quick research, could dispense with the rest.

Napolitano’s argument is this:

The Constitution gives the federal government the power to regulate “interstate commerce,” under something called the Commerce Clause. Medical care, in Napolitano’s view, is not “interstate commerce,” so it can’t be regulated. The sale of insurance is commerce, so Congress’ “refusal” to get rid of barriers to the sale of insurance across state lines is an “abuse of power by the federal government for political purposes.”

Heavy stuff. How did everyone miss this?

Let’s start with the question of what, exactly, is “interstate commerce.”

You’d think it was simple. Commerce is buying and selling things, and interstate means across state lines. In 1789, what was “interstate commerce” was probably pretty easy to figure out. But as the country became more connected, and the federal government more powerful, it got complicated. It came to a head during the New Deal.

At that time, the federal government started regulating all kinds of things it hadn’t regulated before. There were lawsuits challenging the government’s authority to do this, arguing that the Commerce Clause barred it. The Supreme Court rejected these arguments. It said that pretty much any economic activity was “interstate commerce.”

So when Napolitano suggests the definition of “interstate commerce” is up in the air, he’s imagining things. He somehow reads a 1995 case as showing a major change. The Court, he says, “came to its senses” when it struck down a federal law banning possession of guns in a school zone. But the case didn’t change anything. It just said that simply having a gun near a school wasn’t “commerce.”

So is medical care “commerce”? Given the decades of precedent, it’s silly to suggest it is not. You go to the doctor and pay him for his services – that’s the simplest form of commerce. And if it’s not commerce then what are we spending $2 trillion each year on? Napolitano says he has discovered a new category of not-commerce: something called “delivery of intimate services to the human body.”

Really, Judge?

But enough with intimacy. What about the sale of insurance? If pretty much everything that can be bought or sold is commerce, then isn’t the sale of insurance commerce, too?

Yes, and the Supreme Court ruled this in 1945. In that case, the Court told the federal government, in essence, that unless it passed a law that said otherwise, federal law applied to the business of insurance.

So isn’t Napolitano right that the federal government is abusing its power by sitting by as “all 50 states to erect the types of barriers that the Commerce Clause was written precisely to tear down”?

No, he’s not. Almost immediately after that 1945 Supreme Court decision, Congress passed a law that created the state-by-state system of insurance regulation we live under today. The fact that the federal government does not regulate insurance is not an example of an “abuse” of power. It is, instead, an example of the properly functioning federal system.

Napolitano may not like that the states are primarily responsible for insurance regulation – I have issues with it, too – but it is simply false to suggest that its existence is something sinister.

Your Honor, there are good and reasonable arguments against the health care reform proposals. Suggesting they are unconstitutional isn’t one of them.

By Evan Falchuk

Eight quick reactions to the President’s speech:

1.  It was a good speech.  Reaction around the blogosphere and elsewhere seems to be dependent on how you felt about reform plans going in.  If you were in favor, you thought it was terrific (warning strong language at the link); if you were against, you thought it was disingenuous.

2.  The interesting question is how people who weren’t sure will react.  By this I mean people who are anxious that reform will affect their health care in ways they don’t like.  There is still the mixed message that created this anxiety in the first place.  On the one hand, the President repeated “Nothing in this plan will require you to change what you have. “  Sounds like no big deal.  On the other hand, he quoted Ted Kennedy as saying the plan “is above all a moral issue; at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.”  Sounds like a very big deal.  Which is it?

3.  The boorish Congressman who screamed “you lie!” at Obama during the address must have been confused and thought he was at a town hall meeting.  But I’ve always thought it would be cool if we had a “Question Time” like they do in the UK.  Presidents would have to face much more interesting and uncomfortable questions than they otherwise get, and it would make for a terrific spectacle.  Obviously this wasn’t the time or place for that sort of thing.  And if we ever do get an American Question Time, representatives will have to come up with better questions than “you lie,” too.

4.  The President talked about “30 million American citizens who cannot get coverage.”  This is different from the 46 million “uninsured” he usually talks about.  The Associated Press thinks the other 16 million are people who could buy or otherwise get coverage but choose not to, as compared to those who want coverage but can’t afford it.

5.  I was surprised to hear the President give more than just a nod to the Facebook health care status update meme.  I mean he quoted it directly: “in the United States of America, no one should go broke because they get sick.”  This must be the first time a President has ever quoted something from Facebook in an address to Congress – it’s some kind of a milestone for social media.  Thoughts on that meme are here.

6. The President talked about the uncompetitive insurance market, noting that “in 34 states, 75 percent of the insurance market is controlled by five or fewer companies.”  It sounds like he’s not just talking about the “public option” when he talks about creating competition in these markets.  His idea of insurance exchanges and a federal health insurance regulator seem to be direct challenges to the state-by-state system of insurance regulation.  It will be interesting to see the reaction of state insurance regulators to this speech.

7.  I was right: the President didn’t talk about the three things I said he wouldn’t talk about.  In fact, he said almost nothing about the delivery of care- it was all about how to pay for it.

8. The President got some laughs with his comment that he thinks “there remain some significant details to be ironed out.”  He’s right, and there’s the rub.  Whether and how that ironing out happens was the question before the President’s speech, and it’s still the question today.