Labor & Employment Law

Insurance Commissioners Refuse to Bow to Insurers on Health Care Rule

By James Parks

State insurance commissioners today beat back efforts by big insurers to gut a proposed new rule that requires they spend a certain amount of premium dollars on actual medical care, not wasteful administration, marketing or executive pay and bonuses.

 The insurance industry sent more than 1,000 executives and lobbyists to the National Association of Insurance Commissioners (NAIC) meeting in Orlando to try and get the rule changed, according to the coalition, Health Care for America Now (HCAN). Large insurers have spent more than $769 million on federal lobbying since 2007, according to HCAN, along with record amounts of political spending through election front groups like 60 Plus and the Chamber of Commerce.

The rule in question, the medical care cost benchmark under the Affordable Health Care for America Act, is known as the medical loss ratio (MLR). It is set at a minimum of 80 percent of premiums for individual and small employer plans and 85 percent of premiums for large employer plans. Insurers that fail to meet those MLRs must rebate the difference to enrollees.

HCAN estimates that if the law had been on the books in 2009, the six largest for-profit health insurance companies would have been required to refund $1.9 billion for that year alone.

NAIC is charged with proposing the spending rule under the new health care law. The group approved only a few technical amendments to its proposals before sending them to the U.S. Department of Health and Human Services (HHS), which will decide whether to adopt the proposals as a regulation or make changes.

Says HCAN Executive Director Ethan Rome:

This is an important milestone in the implementation of the Affordable Care Act. The commissioners told the insurance companies that the rules have changed and their stranglehold over our health care is ending.

After HHS adopts the commissioners? recommendations, the formal rule will end the insurance companies? practice of spending too few premium dollars on actual medical services even as they deny people the health care they need and charge us more and more.

Full post as published by AFL-CIO NOW BLOG on October 21, 2010 (boomark / email).