Compensating individual health policyholders who pay more for coverage than the new federal laws permit could be tricky, an insurer executive says.
Brian Reese, a vice president and senior actuary at Assurant Health, Milwaukee, a unit of Assurant Inc., New York (NYSE:AIZ), has written about the issue in a comment letter submitted to an actuarial subgroup at the National Association of Insurance Commissioners, Kansas City, Mo.
The subgroup is helping the NAIC implement the Affordable Care Act, the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act.
One PPACA provision, a minimum medical loss ratio provision, would require individual and small group health insurers to spend at least 80% of premium revenue on health care and quality improvement activities, and large group insurers to spend at least 85% on health care and quality improvement activities.
Carriers would compensate for medical loss ratio miscalculations by providing rebates.
Subgroup members are working to come up with strategies for coming up with “credible,” or actuarially convincing, pools of claims data.