Thursday, October 21st, 2010 - 8:52
Thursday, October 21, 2010 - 08:32
The Executive Committee of the National Association of Insurance Commissioners is set to vote today on their recommendation for how the medical loss ratio should be calculated.
Today's vote by the NAIC on the medical loss ratio is one of the major early milestones for health reform, as it will pit the forces of insurance companies against the sentiments that drove health reform in a major implementation decision.
Reports indicate that the draft regulations going up for a vote by the NAIC's Executive Committee closely track the spirit of health reform as it was written. The health law stipulates that insurers must spend 80 percent of the premiums they collect on medical care in the small group and individual market, and 85 percent in the large group market. But the law left the details up to regulators.
Insurance companies are lobbying up to the last minute for changes that would make it easier for insurance companies to meet these requirements, such as allowing them to meet the requirements on a national basis instead of on a state-by-state basis. And some state insurance commissioners are afraid that an immediate implementation of the MLR would disrupt the private market, causing some insurers to pull out altogether.
Today's vote is just a recommendation, with the final decision going to HHS. But it's an important early test, and one that has involved the participation of top HHS officials.
So far, the administration has shown a willingness to bend the requirements of health reform to preserve the private insurance market. The MLR decision provides another test -- and maybe the most crucial so far -- in balancing the new direction of health reform with the demands of the private market on which reform still relies.
