Health Insurance Forum

Seeing Threat to Individual Policies, State Officials Urge a Gradual Route to Change

by mahir on 16/06/10 at 11:45 am

The National Association of Insurance Commissioners, representing state officials, says the federal government should obtain steps to stop disturbance of the market.
Specifically, the group is drafting a recommendation that urges the federal government to permit a steady three-year evolution in states where the new obligation, which takes effect Jan. 1, could undermine the market.
Without a changeover, insurers “may cancel individual policies, if the conditions of the policies sanction cancellation, and finish offering these plans,” says a document prepared by the association. “This budding withdrawal could have a brutal impact on the currently insured, who would lose their policies, and could also limit the choices existing to probable purchasers.”
The law will necessitate many insurers to use a larger share of their premium revenue — at least 80 percent — on medical care (and quality-improvement activities), rather than administration, operating cost and proceeds. Insurers must repayment money to consumers if they do not convene the standards, known as medical-loss ratios.
Democrats in Congress championed the minimum-loss ratio as a prevailing fortification for consumers — a way to warranty that policyholders “receive value for their premium payments,” in the words of the law.
In its draft policy statement, the association says federal officials should lower the threshold “on a state-by-state basis” if instantaneous enforcement of the 80 percent prerequisite would destabilize the individual insurance market.
The association does not name states that might need a indulgence. Presumably, they include less-populous states with somewhat few insurers. But California officials said they, too, were tremendously worried.
Under the law, the association has a particular role advising the secretary of California health insurance and human services, Kathleen Sebelius, on how to define and calculate medical-loss ratios. Ms. Sebelius served as president of the association in 2001, when she was insurance commissioner of Kansas and an honest advocate for consumers.