MEDICAL LOSS RATIO WAIVERS: AN UPDATE

The Affordable Care Act’s medical loss ratio issue (requiring insurers’ administrative and other non-medical costs to remain below prescribed percentages) has dropped out of the limelight recently, but that doesn’t mean that it’s been forgotten.

Up until last week, the Department of Health and Human Services had approved three MLR waivers (for Maine, Nevada, and New Hampshire) and rejected none, leaving some observers anticipating approval of all waiver requests. It’s now apparent that that isn’t going to happen.

North Dakota became the first unlucky state last week, when HHS rejected its waiver request on the grounds that the state’s three largest insurers are already meeting, or are very close to, the target MLRs, and that accordingly the MLR provision would not disrupt the state’s insurance market (the requirement for a waiver to be issued).

HHS also showed that it is willing to issue partial waivers. Both Iowa and Kentucky were given waivers allowing them to apply lower thresholds than those specified in the ACA, and only for a limited time.

The MLR requirement has continued to result in insurers leaving marginal markets, especially for individual coverage. Aetna has announced it is leaving the individual market in Colorado and also in Indiana, where it becomes the fifth carrier to depart while the state’s waiver request is being considered by HHS. So far, however, none of the exiting insurers in any state could be considered a major player in that state, so that the number of policyholders required to switch coverage is small.

Meanwhile, in addition to that of Indiana, waiver requests from Georgia, Louisiana, Michigan, Kansas, South Carolina, and Florida remain on the HHS desktops awaiting resolution.