The Indiana Department of Insurance is asking federal regulators to waive the new minimum medical loss ratio (MLR) requirement for insurers in the Indiana individual health insurance market.
Indiana Insurance Commissioner Stephen Robertson will be asking federal regulators to phase in higher MLR levels, rather than imposing a strict cut-off this year.
The Indiana department supports efforts to challenge the constitutionality of the Patient Protection and Affordable Care Act of 2010 (PPACA) as a whole, Robertson says in a statement.
“But, if [PPACA] remains the law of the land, I must do everything in my power to protect Hoosiers and the health insurance market from its unintended consequences,” Robertson says.
PPACA requires health insurers to spend 80% of individual health insurance policy revenue on health care and quality improvement efforts or else provide rebates.
The Indiana department has prepared a MLR rule effect analysis that shows that 5 carriers report more than $10 million in annual individual health premium revenue in the state. Together, the carriers account for about 85% of the state’s estimated $446 million in total annual individual health premium revenue.
The top 5 individual health carriers had estimated MLRs ranging from about 60% to about 77% in Indiana in 2010.
If individual health insurers in Indiana had been required to meet the 80% minimum MLR requirement in 2010, then 44 of all 63 insurers in the market might have had to pay MLR rebates. They might have had to return about $30 million, or about 7.1% of the individual health premium revenue collected, to about 181,000 individuals, or 94% of the covered individuals. Rebates would have averaged about $165 per individual.
Robertson is proposing that Indiana set the minimum MLR level at 65% in 2011, 68.75% in 2012, 72.5% in 2013, 76.25% in 2014, and 80% in later years.
If PPACA takes effect as written, it will impose major changes, such as a requirement that insurers sell individual health insurance on a guaranteed-issue, mostly community-rated basis, on the individual health market in 2014.
“Relief through 2014 allows for pricing stability so that Hoosiers can budget for their premiums in what will undoubtedly be a volatile year,” Robertson says.