Friday, October 22nd, 2010 - 8:56
Friday, October 22, 2010 - 08:40
State insurance commissioners adopted strict standards for the medical loss ratio. The buck now stops with the Department of Health and Human Services.
State insurance commissioners have granted the wishes of consumer advocates by holding the line on tough new recommendations for the medical loss ratio, according to The New York Times and several other media sources. The recommendation now goes to HHS Secretary Kathleen Sebelius for final approval.
Insurers would have to spend 80 percent of their premium dollars on medical care in the small group and individual markets, and 85 percent in the large group market. If they don't meet those standards, they would have to provide rebates to consumers.
Insurers asked commissioners for many things they didn't get, including the ability to count fraud prevention efforts as medical care and the ability to meet the MLR requirements on a nationwide basis instead of a state-by-state basis.
Presumably, the tough line of the insurance commissioners gives Sebelius good cover to give final approval to the tough new standards. However, insurance commissioners from a few states have asked for a three-year phase-in of the requirements instead of an immediate and full enactment because of concerns that going too fast will cause insurers to pull out and disrupt the market.
The feds have already signaled they would be willing to grant waivers. Now, the tough decisions will revolve around what states need to show to demonstrate market disruption, and what constitutes "disruption" in the first place.
Again, the balance must be found amid the tension between the spirit of health reform and making sure its implementation is not overzealous -- and, by result, self-defeating.
