Federal Government Partially Grants Kentucky’s Medical Loss Ratio Waiver Request
Jul 23rd, 2011
Federal Government Partially
Grants Kentucky’s Medical Loss Ratio Waiver Request
The federal government has
partially granted a waiver request submitted by the Kentucky Department of
Insurance for relief from the medical loss ratio requirement in the Accountable
Care Act.
The medical loss ratio provision
in the new federal health reform law limits the profits and administrative costs
of health insurers in the individual market by requiring them to spend at least
80% of premiums on medical services or return the excess to consumers in the
form of rebates.
The Kentucky Department of
Insurance, citing instability in Kentucky’s insurance market as a result of
state health reforms in the 1990s that have since been repealed, requested the
new requirement be phased-in over time: 65% this year; 70% in 2012; 75% in
2013; and 80% in 2014.
A July 22 letter from the federal
Center for Consumer Information and Insurance Oversight rejected the argument
that the new requirement would destabilized Kentucky’s health insurance market
and only approved an adjustment for one year, permitting insurers to spend 75%
of premiums on medical services this year and the full 80% required by the law
in 2012.
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