States want slower medical-loss ratio phase-in

More than 30 state insurance commissioners lobbied President Obama and his senior policy staff on Wednesday to slow down the phase-in of the medical-loss ratio rule or risk driving insurers out of the market, the Associated Press reports.

The rule is currently set to kick in on Jan. 1. Companies that fail to meet the minimum medical-loss ratios, or MLRs, of 80 percent for individual and small-group health insurance and 85 percent for large-group coverage, will be forced to give consumers rebates for the difference.

Kansas Insurance Commissioner Sandy Praeger and Florida commissioner Kevin McCarty asked the White House to soften the 80 percent requirement, perhaps by phasing it in.

If states determine the new rule will lead to an exodus of insurers from local markets, they may apply to HHS Secretary Kathleen Sebelius for a waiver, AP reports. Maine and Iowa have already done so.

Maine currently has a 65 percent requirement, the New York Times reports. And the head regulator there said pushing for the 80 percent MLR could destabilize the individual insurance market.

Iowa's insurance commissioner Susan Voss asked Sebelius to extend the deadline to meet the new requirement to 2014 instead of 2011, the Des Moines Register reports.

Several carriers in the individual market already notified her that they will no longer offer policies in that market, Voss told the New York Times. Smaller carriers in Iowa's market could suffer, she worried. 

Apparently, insurer gripes have not been specific enough for the White House. "Amorphous displeasure" with the new provision is not enough, McCarty learned from a federal health official, who said states must provide concrete examples of the possible adverse effects on the market.

The new law will likely cause major dislocation in the industry. "Some companies' business plans simply will not be successful ... They either have to adjust their business plans or perish," notes McCarty.

To learn more:
- read the Associated Press article
- here's the New York Times article
- see the Des Moines Register story

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