Here are statements in response to reports from the Kaiser Family Foundation and Consumers Union and Florida CHAIN that the minimum Medical Loss Ratio rule in the new federal health care law will require tens of millions of dollars in refunds from Florida health insurers this summer.

From Jack McDermott, Director of Communications, Florida Office of Insurance Regulation:

The NAIC Supplemental Health Care Exhibit (NAIC-SHCE) and the Preliminary Medical Loss Ratio included in this exhibit were reported to the NAIC on April 1. The NAIC has been very clear that this data was for informational purposes only as it pertains to solvency, and was not intended to be used to calculate potential MLR rebates. Such a calculation is impossible, since this exhibit does not include all claims needed for the MLR rebate calculation, nor does it contain statistical adjustments required under federal law. The official MLR reporting forms are due on June 1.

Although the NAIC and the Office believe it was inadvisable to use the April 1 data to make rebate estimations, the Kaiser Foundation has apparently issued a report based on their own proprietary methodology extrapolating from this data. Kaiser has not shared their methodology or findings with the Office, and therefore, we cannot comment on their methodology or findings. The NAIC and the Office would like to reiterate that it is premature to speculate on MLR rebates prior to the June 1 filings.

You may contact the NAIC Communications Office at 1-816-783-8909 to learn more about the NAIC Supplemental Health Care Exhibit (NAIC-SHCE), and why it is inappropriate to use this data to estimate MLR rebates.

Please let me know if you need any additional information or if we can offer more assistance.

Kindest Regards,

Amy Bogner
Deputy Director of Communications
Florida Office of Insurance Regulation
(850) 413-2515

Thursday, April 26, 2012 3:41 PM

Subject: AHIP Statement on MLR/Fact Check on Coverage for Pre-Existing Conditions

AHIP today released the following statement on our blog on prospective rebates to consumers as a result of the new Medical Loss Ratio (MLR) requirement.   

“The new medical loss ratio requirement (MLR) does nothing to address the real driver of premium increases: the underlying cost of medical care.  Given the inherently unpredictable nature of health care costs, it is not surprising that some health plans expect to pay rebates to consumers in certain markets. However, the coverage disruptions and other unintended consequences of imposing a new arbitrary federal cap on health plan administrative costs are likely to outweigh any benefit these rebates will provide to consumers.  Moreover, the taxes, benefit mandates, and other regulations included in the health care reform law will cause premium increases that far exceed the value of prospective rebates.  For example, a technical analysis by Oliver Wyman estimates that the new health insurance tax included in the ACA “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.”

“Health plans are leading the way on delivery system reform and investing in quality improvement initiatives to ensure consumers are getting the best value for their health care dollar.  The MLR regulation could turn-back-the-clock on these quality enhancing programs as well as fraud prevention initiatives while potentially inhibiting the next generation of delivery system reforms.”

Fact Check on Coverage for Pre-Existing Conditions

With increased attention on pre-existing conditions and the individual insurance market, we wanted to share the following information with you:
  • The vast majority of people under the age of 65 get their health care coverage through their employer.  People receiving coverage through their employer are guaranteed coverage regardless of pre-existing conditions, and the premiums they pay are not based on their health status.
  •  The individual insurance market functions much differently. In an environment where some people choose not to purchase coverage, applicants undergo an underwriting process to keep coverage as affordable as possible for all policyholders. It provides a necessary incentive for people to purchase coverage before they need it, and to maintain coverage over time. According to the latest Census Bureau data, seven percent of people under the age of 65 get their coverage through the individual insurance market.
  •  Throughout the health care reform debate there was broad agreement that requiring insurers to provide a policy to any applicant without varying premiums based on health status cannot work without an individual mandate:  What They Are Saying: The Link Between Market Reforms and the Mandate
  • Coverage in the individual market is more affordable and accessible than is widely believed. In fact, according to AHIP’s latest individual market survey, 87 percent of people who applied for individual coverage were offered a policy.
  • Health plans have pioneered programs and services to help improve care for patients with chronic health conditions:
  • AHIP Issue Brief: Transforming Care Delivery
  • Recent AHIP testimony to Senate HELP Committee on delivery system reform
  • Article in September Issue of Health Affairs: Health Plans and Providers Partnering to Advance Accountable Care
  • AHIP Innovation Series highlighting health plan innovations in health care delivery and quality improvement.
Robert Zirkelbach
Vice President, Strategic Communications
America's Health Insurance Plans
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