Texas Denied Waiver on Medical Loss Ratio Requirement


Texas Denied Waiver on Medical Loss Ratio Requirement

Monday, January 30th, 2012 - 9:33
Monday, January 30, 2012 - 08:09
The state asked the federal government to allow health insurers more time to comply with the Affordable Care Act's requirements.

The Associated Press reports the Department of Health and Human Services rejected Texas' appeal for a waiver to gradually come into compliance with the Affordable Care Act's medical loss ratio 80-20 rules. Medical loss rules require health insurers to allocate a minimum percentage of their revenues towards covering health care and not administrative costs. In this case, the minimum standard is 80%.

The Texas Department of Insurance lobbied to gradually adjust to the new requirements starting at 71% in 2011, eventually reaching the 80% mark in 2014. Without the waiver, Texas health insurers expected to pay $476 million to customers in rebates over the next three years.

Seventeen states have applied for waivers with nine states having been denied. Six states have been granted a waiver - led by Republican and Democratic governors. In general, states must prove that their health insurance market will be destabilized by the immediate implementation of the new medical loss ratios.