Groups urge reviews of insurers' medical loss ratios, state lobbying

Two consumer groups urged HHS to examine recent declines in major health insurers' medical loss ratios, contending the changes could reflect moves to help the insurers "game" the system later, when new requirements for medical loss ratios go into effect. Separately, a healthcare activist group called for public disclosure of health insurers' state lobbying expenditures, which the group said have risen to "unprecedented" levels as states work on key aspects of the federal health reform law.

In a letter to HHS Secretary Kathleen Sebelius, Consumer Watchdog and the Center for Media and Democracy asked HHS to determine if insurers are using unjustifiable rate increases and plan closures to push customers into higher-deductible and lower-benefit plans with lower medical costs. The groups argue insurers will face pressure from investors to hold medical loss ratios to the minimums required by the new federal health reform law. They contend insurers have incentives to cut medical costs now because new definitions will raise medical loss ratios, partly by qualifying more activities as "health quality expenses." Recent reductions in medical loss ratios appear designed to protect those gains, the groups charged.

The Los Angeles Times paraphrased the insurance industry's response as, "A few months of financial data may obscure the fact that insurers devote most of their premium income to healthcare."  According to America's Health Insurance Plans, administrative spending by major insurers has declined for six straight years, the LA Times reports.

Meanwhile, Health Care for America Now, in a blog post by its executive director, said obtaining information on health insurers' state lobbying is vital now because insurers have been aggressively seeking to influence state insurance commissioners' recommendations for medical loss ratios. Figures on state lobbying expenditures by health insurers are readily available only in New York, where the health insurance industry spent $10.6 million on lobbying since 2007, HCAN said.

A review of campaign finance data showed that insurance companies and HMOs have given more than $42 million in state-level campaign contributions since 2003, reports the LA Times. "The pressure that the industry can bring to bear in state legislatures is unbelievable," a former Texas insurance commissioner told the newspaper.

For more:
- read the consumer groups' letter to Sebelius
- read the Los Angeles Times news item on the letter
- read the HCAN blog post
- read the LA Times story on state regulation of insurance rates

Suggested Articles

Outpatient specialty drugs can be a lucrative income source for not-for-profit hospitals, but Washington presents some risks, Moody's says.

The growing role of data in our lives raises important questions about data access and ownership. Who rightfully owns the data?

Anthem posted $1.18 billion in third-quarter profit, an increase of 23% over the prior-year quarter.