Underneath all the sound and fury over the Obamacare waiver sought by the Indiana Department of Insurance are two basic questions: How much of a health insurance premium should go toward medical care? Who should decide?
Indiana's answer to that second question, that the insurer should be able to make that decision, is unsatisfactory to the federal government and to us.
The new federal standard is that 80 percent of the cost of insurance go toward medical costs. Indiana Insurance Commissioner Stephen W. Robertson formally requested a waiver. The denial came in a Nov. 27 letter from the U.S. Department of Health & Human Services.
The point of Obamacare is to drive down, or at least slow the acceleration of, health care costs. How successful it will be in that regard remains to be seen.
However, Indiana's argument that large overhead costs can be healthy is one-sided. Healthy for the insurer, sure, but not for the consumer.
And some of those overhead costs were massive.
One of the insurers listed in that letter spent just 54.5 percent of premiums on medical care in 2010. Put another way, 45.5 percent of patients' premiums went for overhead costs.
That's no small company, either. It ranks fourth in the state in market share.
Seven of the state's top 15 insurers spent about 65 percent of the health care insurance dollar on actual medical care costs.
And yet Gov. Mitch Daniels, reacting to news of the the federal government's denial of the waiver, said, "Once again, the Obama administration took a position in favor of higher health care costs and against personal freedom. Today's letter is further proof that the (Patient Protection and Affordable Care Act) is a catastrophe for America and must be repealed."
Indiana's argument that insurers might leave the market if the rules are too strict doesn't hold water. The state offered no proof.
Instead, look at the big picture. Health care costs have been soaring and must be brought under control. More of the health care dollar should go toward patient care. That means taking actions such as bringing to the nation the kind of tort reform Indiana has enjoyed for years, something Congress has yet to accomplish. But it also means getting insurance companies to get their own costs under control.
Allowing 20 percent for administrative costs seems quite enough. It's a good thing the federal government didn't grant Indiana's request for a waiver from that consumer protection rule.