The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Maine Gains Three Year Waiver from Medical Loss Ratio Target

Posted by Alan on March 15, 2011

The Patient Protection and Affordable Care Act requires carriers offering coverage to individuals and families (not purchased on their behalf by an employer) to spend 80 percent of premium on medical claims or other costs related to health care quality. These medical loss ratio provisions took effect in January of this year and has created a host of challenges for states, carriers and brokers.

Authors of the PPACA anticipated that quickly implementing this 80% MLR requirement could disrupt the individual market. Consequently, the health care reform law empowers the Secretary of Health and Human Services to waive this requirement if states can demonstrate that meeting the 80 percent target would “destabilize the individual market” in the state.

To date, five states have sought this waiver: Florida, Kentucky, Maine, New Hampshire, and Nevada. And one of those requests, Maine’s request for MLR release was recently granted by HHS. In approving the waiver, HHS agreed with that a 65 percent medical loss ratio was appropriate given the circumstances in Maine. The waiver is for three years (meaning carriers will have to achieve the 80 percent MLR target in 2014) although the Maine Bureau of Insurance will need to demonstrate the need to keep the waiver in place for 2013. In the letter approving the request, HHS noted that only three carriers issued almost all of Maine’s individual insurance policies: Anthem Blue Cross Blue Shield of Main (with 49 percent market share), MEGA Life & Health Insurance Company (with a 37 percent share), and HPCH Insurance Company (13 percent).  As reported by HealthCare Finance News, MEGA Life and Health had stated it “would likely withdraw from the state if forced to immediately adhere to the 80 percent MLR standard.”

What level of disruption to their individual market that states will need to demonstrate is still unknown. The Maine decision is based on the unique situation of that state and one data point is hardly a trend. However, the Obama Administration is focused on making health care reform work, so they are being very practical when considering waivers and the like. They seem very intent on giving states latitude in implementing the law, James Gutman at AIS Health refers to as “’bend but not break’ mode.”It would not be surprising to see additional states consider seeking the waiver in light of Maine’s success.

In fact, Florida officially filed its waiver request only last week. In making the request Florida Insurance Commissioner Kevin McCarty asserts that meeting the 80 percent MLR requirement would drive some carriers to exit the individual market in the state, erect barriers to entry discouraging new carriers from entering the market, reduce the number of offerings in the individual market and “severely hamper agent involvement in the individual market to the severe detriment of Florida consumers.” Florida is seeking the same three-year waiver received by Maine for insurance plans (65 percent) and a 70 percent MLR for HMO.

For those interested in what their own state is considering concerning requesting a waiver from the PPACA’s medical loss ratio targets in the individual market, Politico Pulse runs a scoreboard each day. As of today, in addition to the five states mentioned above, 11 are leaning toward seeking a waiver, 16 are leaning against requesting relief, and the remainder have yet to make their intentions known.


2 Responses to “Maine Gains Three Year Waiver from Medical Loss Ratio Target”

  1. Harald Schot said

    Nicely said Ann

    Brokers are taking it directly in the wallet and yet rates continue to climb. Once the broker commissions are gone, what will be the excuse? It amazes me how many people feel the brokers don’t do anything yet are extremely happy once they meet with a knowledgable one. Why don’t we add CPAs, Auto and Home agents, Lawyers to the mix? It’s so easy to accomplish this on the internet 🙂

    Here’s two recent articles I saw on the NAHU website.

  2. Ann H. said

    PPACA is falling apart bit by bit. Waivers for MLR, over 1000 waivers for businesses with mini-meds, delays in non-discrimination rules & penalties, delay of the 1099 rule, offers of different open enrollment restrictions to fix the “child only” market implosion, offer to the states to enact their own style of health care reform in lieu of the federal model… The PPACA is functionally impossible, and as it rolls on we will see more and more waivers and delays.

    I take note of WHO is involved in these events, and how interesting it is to see it play out. HHS is the very one that is dismantling PPACA piece by piece. MEGA Life and Health is the carrier that prompted Maine’s MLR rule waiver, a carrier known well for it’s “mini-med” and “stripped down” plans. Maine (a Guarantee Issue state) is the one that was the first to fall under PPACA rules, due to its fragile market. Unions are high among those that needed waivers. Has anyone noticed that those entities that kept the traditional straight and narrow path are still standing, while those entities that don’t are falling?

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