Health Insurance Info for Colorado

news & commentary on health insurance and benefits

HHS issues interim medical-loss-ratio (MLR) regs

Tags: , , ,

First, some background: medical-loss-ratio (MLR) regs are a controversial element in the Affordable Care Act (ACA), generally known as Obamacare. These regulations impose specific mandates on insurer premium revenues that relate directly to payments for clinical care. Under the ACA, 85 cents of every premium dollar must be spent for claims in the large group market, with 80 cents used as the new rule for the small group and individual health insurance market, regardless of where the insurer does business. These regulations are intended, so the story goes, to reduce excessive administrative expenses. You know, things like, salaries, commissions, and so on. Obviously expenses that are luxuries, right?

Maybe somebody should try and do that with Medicare and Medicaid, neither of which can even estimate, for example, what fraud costs the American taxpayer. But I digress.

To put this in contrast, it has been generally reported that health insurers spent 60 to 70% of premium revenue, more or less, on clinical care payments prior to the enactment of the legislation. Some insurers probably spent more, some less, of course.

Now, it’s no secret that meeting this new medical loss ratio will be problematic for insurers. There is, roughly, a 10 to 20% gap between where insurers are and where they need to be under the new regulations, maybe more. One might be prompted, if you were inclined to froth on about “obscene profits” or rant against “evil health insurers”, to assume that health insurers would simply reduce their allegedly bloated profits, or simply increase rates to meet this new requirement. However, it isn’t as simple as that – especially given the fact that your local grocery store probably makes more in profit percentage than, say, Aetna on an average year. Obviously, given the fact that the federal government is now in charge of both setting prices on premiums, as well as determining what will and won’t count towards the “80% MLR”, insurers were keen to make sure that HHS listened to their concerns regarding what counted as claims-expense and what didn’t.

The actual interim rule, scheduled for official release December 1 and with an official date of January 1, is published here. Entitled “Health Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements under the Patient Protection and Affordable Care Act”, the document is 308 pages long, and was written by the Office of Consumer Information and Insurance Oversight, Department of Health and Human Services, headed by Jay Angoff. The interim rules build on discussions between Health and Human Services (HHS) and the National Association of Insurance Commissioners (NAIC). In spite of the over-heated warnings of insurance industry “demands” coming from so-called consumer advocacy groups, virtually all of whom are progressive policy organizations, HHS recognized the NAIC by stating that “this interim final regulation adopts and certifies in full all of the recommendations in the model regulation of the National Association of Insurance Commissioners (NAIC) regarding MLRs.” As a practical matter, though, it seems to escape the champions of left-wing “consumer justice” that these interim rules were adopted without any changes by the health insurance industry, as reported by the Wall Street Journal here and here.

It will take me a little time to review this interim rule, and I will comment on it in the future. One thing that I did note in my brief review is the apparent suspicion that HHS holds for the health insurance industry. The other is that, regarding their recommendations to HHS, the NAIC acts very much like any other political organization, in that it’s actions and recommendations are all based on political calculus intended to advance policy positions. It should be obvious to anyone that the NAIC is made up of appointed (by governors) or elected (as in California) state insurance commissioners who do make a point of advancing the policy goals of their respective Democrat or Republican leaders, bureaucracy notwithstanding. It will be interesting to see what will happen going forward, as newly elected Republican Governors begin to make their weight felt in the proceedings of the NAIC and its recommendations to HHS with model rules, especially with states that appoint insurance commissioners. Colorado, due to the election of John Hickenlooper, will likely continue its left of center lean with rule-making recommendations. I suspect that, in the future, HHS might view the NAIC with less and less authority, especially if they begin to differ with the timeline or policy goals of health care reform as laid out by the Obama Administration.

UPDATE: Commentary on the impact of medical-loss-ratios here.

Obamacare and Colorado health insurance premiums

Tags: ,

An excellent article posted at Patient Power, the health care policy blog at The Independence Institute. The Colorado Division of Insurance is claiming that, for small group policies in 2010, premiums will climb an additional 5% due to the effects of new Federal requirements, while individual plans will climb up to 7.8%.

Update: mandatory maternity forces insurer to withdraw policies Jan. 1

Tags: ,

United HealthOne/Golden Rule, in an email release today, announced a temporary exit from the Colorado individual insurance market due to House Bill 10-1021, CONCERNING REQUIRED COVERAGES FOR REPRODUCTIVE SERVICES FOR HEALTH INSURANCE POLICIES.

Beginning January 1st, 2011, all individual policies sold in Colorado must provide for maternity and reproductive services, same as any illness, except in cases of pre-existing condition.

“Following recent passage of legislation mandating unisex rating and maternity coverage, Golden Rule was required to file new plan designs with the Colorado Division of Insurance (DOI). In early 2011, we will again offer consumers in Colorado a wide range of affordable health plan choices.

As of December 31, 2010, the only UnitedHealthOne plan that will remain available in Colorado is personal Dental.”

The new law, codified under 10-16-104 (3) (a) (I), Colorado Revised Statutes, doesn’t specifically address whether in-force individual plans will be required to provide this coverage on 1 January, or if individual plans will be allowed to update their coverage requirements at time of policy renewal.

Calls to other carriers operating in Colorado elicit little if any additional information on the benefits required under the law, or how these new mandates will affect premiums, or if other carriers may be forced to follow suit with “temporary” disruptions of individual health insurance availability on 1 January.


United HealthOne out of Colorado Jan. 1, 2011

Tags: ,

United HealthOne has dropped all individual policies for Colorado consumers effective January 1, 2011

Grandfathered-status rules amended by HHS


Federal regulators have amended the grandfathered-status rule under the health care law known as Obamacare. Employers with insured group health plans can switch plans and carriers that provide similar coverage, but at lower cost, without losing their grandfathered status.

Under the original rules, group plans could lose their grandfathered status if the employer switched from one insurance carrier to another.  The original regulation only allowed self-funded plans to change third party administrators without losing grandfathered status; now, all groups health plans can change TPA’s or carriers and maintain their grandfathered status.

Average health insurance deductible in 2010: $1,200

Tags: ,

According to Mercer, the average deductible for popular PPO plans now stands at $1,200 annually for employers with 10 or more employees.

The Mercer survey also found that health benefit costs rose 6.9% this year – up from 5.5% in 2009.

Another trend noted in the study is that large employers were adopting high-deductible plans, linked to health savings accounts, more quickly than small employers. The reason? Lower costs – high deductible HSA plans are more than $2,000 a year less expensive per employee, including employer contributions to the savings account.

© 2009 Health Insurance Info for Colorado. All Rights Reserved.

This blog is powered by Wordpress and Magatheme by Bryan Helmig.