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PPACA: Clock Ticks on Two State MLR Relief Apps

By Allison Bell

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Two states say they need to set the minimum medical loss ratio (MLR) for the individual markets at 65%, rather than 80%, to keep those markets stable.

The Center for Consumer Information and Insurance Oversight (CCIIO) announced today that it has deemed the MLR relief applications from Florida and Michigan to be complete.

Commenters who want to weigh in on the applications have until Oct. 27 to do so.

CCIIO, an arm of the U.S. Department of Health and Human Services (HHS), now has received a total of 17 state and territory MLR relief applications and is still in the process of reviewing 4 of the applications for completeness.

States and territories are going through the relief process in response to a provision in the Patient Protection and Affordable Care Act of 2010 (PPACA) that now requires health insurers to spend at least 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts. If MLR levels fall below the cut-offs, a company must pay rebates to its customers.

The state MLR relief filings give interesting individual group health insurance market snapshots.

Florida, for example, has sent CCIIO officials figures from 21 insurers without giving the insurers’ names. Those carriers reported a total of $1.9 billion in individual earned premium in 2010 and had a median PPACA MLR of 75.1%.

If PPACA rules had been in effect in 2010, the carriers would have paid $25 million in rebates.

They insurers paid agents and brokers about $102 million in commissions.

Michigan has given the names of the 20 carriers in its table.

Those carriers generated about $760 million in adjusted premiums from providing individual health coverage in 2010, and they had a median estimated PPACA MLR of 70.63%. They paid a total of $38 million in agent and broker commissions and, if they had been subject to the MLR rules in 2010, they might have paid about $30 million in rebates.