Health insurers granted federal relief -- sort of



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New Hampshire health insurers have been granted a temporary exemption on the minimum medical loss ratio required as part of compliance with federal Affordable Care Act, but it wasn't quite the exemption they were looking for.On behalf of the state's individual market insurers, the New Hampshire Insurance Department filed a request in January to the U.S. Department of Health and Human Services for a decrease in the required medical loss ratio percentage - the amount of premium money actually spent on reimbursing care -- from the federally required 80 percent to 70 percent until 2014.According to a response letter sent May 13 by the federal Center for Consumer Information and Insurance Oversight (a part of the federal HHS' Center for Medicare and Medicaid) to New Hampshire Insurance Commissioner Roger Sevigny, an exemption was granted - for 72 percent. In 2012, the ratio rises to 75 percent, and the full 80 percent by 2013.Steven B. Larsen, deputy administrator and director of the consumer information center, wrote in the letter, "This approach, which creates a glide path for compliance with the 80 percent standard, balances the interests of consumers, the state and the issuers in accordance with the principles underlying the MLR (Medical Loss Ratio) provision."The Affordable Care Act requires issuers in the individual market to spend at least 80 percent of premium dollars on reimbursement for care of members. Beginning in 2011, if an issuer does not satisfy the provision, it was required to provide rebates to enrollees.In 2010, the state mandated a medical loss ratio of 65 percent in the individual market. Prior to that, there was no requirement, according to the Insurance Department's January rate reduction request letter to the federal government.According to the Insurance Department, five companies wrote individual policies in 2010: Anthem Blue Cross and Blue Shield in New Hampshire, Time, Chesapeake, John Alden and Celtic, with Anthem having 72 percent of the market.The rebate and earnings calculations were based on data supplied by the Insurance Department.With an adjusted medical loss ratio of 72 percent (a calculation based on the ratio and a "credibility" adjustment percentage, used in order to more accurately reflect actual market forces) based on 2010 premiums, Anthem would have had to pay a rebate of an estimated $5.6 million, which would still have allowed the insurer to earn an estimated pre-tax net of $15 million in its individual market business in New Hampshire.Chesapeake, which did 16 percent of the state's individual business in 2010, would have paid a rebate of $300,000, with an adjusted medical loss ratio of 77 percent -- and would have seen a pre-tax loss after the rebate of an estimated $1.6 million, based on CMS calculations.The state, in its rate reduction request, also expressed concern that if other New England states offered individual plans subject to lower medical loss ratios, it could further destabilize New Hampshire's market by driving business across the border.Based on information from CMS and its website, only Maine applied for a rate reduction, to 65 percent, through 2012, which was granted because of its specific market conditions.As of May 13, "New Hampshire's other three neighboring states, Massachusetts, New York and Vermont, have not submitted applications," wrote CMS's Larsen. - CINDY KIBBE/NEW HAMPSHIRE BUSINESS REVIEW Edit ModuleShow Tags