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ACA in Wisconsin

Medical Loss Ratio Debate: Other States and the NAIC

On Monday, we blogged about Wisconsin’s attempt to request an exemption for a healthcare reform provision that would require at least 80% of consumer premiums to go toward direct medical care,  known as medical loss ratio (MLR). The debate has sparked action from the National Association of Insurance Commissioners (NAIC) – who are split on the issue.

Last Tuesday, the NAIC voted 26-20 to adopt a resolution that favors brokers instead of consumers. The resolution would amend the MLR provision to allow broker and agent pay to be exempt from “administrative costs.” Supporters of the resolution argue that without this amendment consumers would not get proper guidance when dealing with insurance companies, which Consumer Watchdog says data does not support.

Individuals and organizations in states that are advancing health reform implementation, such as Maryland, urged their own Insurance Commissioner not to support the resolution. They argued that the MLR restrictions have already shown positive effects – such as slowing the growth of claims. Studies from the NAIC itself also show that if this amendment regarding brokers were implemented, consumers would lose out on 2/3 of the rebates projected – over 1.2 billion dollars. Maryland’s Insurance Commissioner was among the commissioners that did not support the resolution last week.

As we wait for federal reply to the NAIC’s request, we are seeing the federal response to other states regarding MLR exemptions they proposed. Just two days ago, on Monday November 28th, the Federal Government denied two MLR exemption proposals.  The states, Indiana and Louisiana, requested waivers similar to Wisconsin’s, asking the Federal Government to allow percentages lower than 80 for the next few years. They were denied this request; however, as the agency found that many companies either already met the 80% requirement, or could easily do so with an adjustment to their business model.

One of the promises of healthcare reform is ensuring increased protections for consumers. The Wisconsin Alliance for Women’s Health hopes to see the pattern by the Federal Government continue by not allowing states MLR exemptions without valid data supporting their reasoning.


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