Orlando Sentinel
Over the protests of the insurance industry, state insurance regulators meeting in Orlando today endorsed a proposed federal regulation that would guarantee a certain portion of your health-insurance premium is spent on medical care.
In a vote Thursday at the National Association of Insurance Commissioners' fall meeting, state regulators agreed to forward their proposal to the U.S. Department of Health and Human Services, which will either adopt or modify the recommendations.
The proposed regulations would require health-insurance companies to spend at least 80 percent of a customer's premium on providing health care and medicines. For customers covered by large-group plans, the insurance company must spend 85 percent of the premium on health-care.
These spending ratios, known as "medical loss ratios," have been the subject of contentious debates for months. Under the Patient Protection and Affordable Care Act passed by Congress in March, the insurance commissioners' association is responsible for recommending definitions and calculations of the ratios to federal officials.
For months, a committee of insurance commissioners held several conference calls with insurance industry officials and others while hammering out their recommendations for how the ratios should be calculated and implemented. The new rules will go into effect in January 2011.
"I commend the work of our regulators and staff as we considered a number of very challenging issues as it moved through the committee process," said Jane Cline, the West Virginia insurance commissioner and current president of the insurance commissioners' association.
HHS Secretary Kathleen Sebelius applauded the insurance commissioners' vote and pledged to work quickly to get a new MLR regulation into place.
"These recommendations are reasonable, achievable for insurers and will help to ensure insurance premiums are, for the most part, supporting health benefits for consumers," Sebelius said. "Not only do they ensure consumers receive better value for their health-care dollar, they recognize special circumstances in different markets to preserve market stability and employee coverage as we transition to the new marketplace in 2014."
Immediately after the vote, Karen Ignagni, president of the health-insurance lobbying group America's Health Insurance Plans, criticized the insurance commissioners' move.
"The current MLR proposal will reduce competition, disrupt coverage and threaten patients' access to health plans' quality-improvement services," Ignagni said.
Insurance industry experts and top attorneys have said insurers may not be able to operate at those levels — and have voiced concerns that some insurers may stop selling health-insurance policies in some areas.
But Timothy Jost, a health-law professor at Washington and Lee University in Virginia — and a consumer representative to the insurance commissioners' association — said some states, such as Washington state, already have these higher ratios.
"Washington's MLRs are in the 90s — and they still have health insurance companies operating in their state," he said. "And there are states that have regulated MLRs for years. They still have insurance industries."
He said the new rules would force insurers to spend less on marketing and administration — and to be efficient.
"There are insurers who are still processing with paper — and they're spending 35 percent of their premiums on administration," Jost said. "If we had an airline that was still printing tickets on paper, and charging higher prices, we wouldn't be using them."
In a vote Thursday at the National Association of Insurance Commissioners' fall meeting, state regulators agreed to forward their proposal to the U.S. Department of Health and Human Services, which will either adopt or modify the recommendations.
The proposed regulations would require health-insurance companies to spend at least 80 percent of a customer's premium on providing health care and medicines. For customers covered by large-group plans, the insurance company must spend 85 percent of the premium on health-care.
These spending ratios, known as "medical loss ratios," have been the subject of contentious debates for months. Under the Patient Protection and Affordable Care Act passed by Congress in March, the insurance commissioners' association is responsible for recommending definitions and calculations of the ratios to federal officials.
For months, a committee of insurance commissioners held several conference calls with insurance industry officials and others while hammering out their recommendations for how the ratios should be calculated and implemented. The new rules will go into effect in January 2011.
"I commend the work of our regulators and staff as we considered a number of very challenging issues as it moved through the committee process," said Jane Cline, the West Virginia insurance commissioner and current president of the insurance commissioners' association.
HHS Secretary Kathleen Sebelius applauded the insurance commissioners' vote and pledged to work quickly to get a new MLR regulation into place.
"These recommendations are reasonable, achievable for insurers and will help to ensure insurance premiums are, for the most part, supporting health benefits for consumers," Sebelius said. "Not only do they ensure consumers receive better value for their health-care dollar, they recognize special circumstances in different markets to preserve market stability and employee coverage as we transition to the new marketplace in 2014."
Immediately after the vote, Karen Ignagni, president of the health-insurance lobbying group America's Health Insurance Plans, criticized the insurance commissioners' move.
"The current MLR proposal will reduce competition, disrupt coverage and threaten patients' access to health plans' quality-improvement services," Ignagni said.
Insurance industry experts and top attorneys have said insurers may not be able to operate at those levels — and have voiced concerns that some insurers may stop selling health-insurance policies in some areas.
But Timothy Jost, a health-law professor at Washington and Lee University in Virginia — and a consumer representative to the insurance commissioners' association — said some states, such as Washington state, already have these higher ratios.
"Washington's MLRs are in the 90s — and they still have health insurance companies operating in their state," he said. "And there are states that have regulated MLRs for years. They still have insurance industries."
He said the new rules would force insurers to spend less on marketing and administration — and to be efficient.
"There are insurers who are still processing with paper — and they're spending 35 percent of their premiums on administration," Jost said. "If we had an airline that was still printing tickets on paper, and charging higher prices, we wouldn't be using them."
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