Michigan Consumers Win on Medical Loss Ratio Rule Denial of State Waiver Application Means Savings of Over $53 Million to Consumers

Michigan Consumers Win on Medical Loss Ratio Rule

Denial of State Waiver Application Means Savings of Over $53 Million to Consumers

FOR IMMEDIATE RELEASE

Contact: Wafa Dinaro

313-622-7038, wafa@consumersforhealthcare.org

LANSING, Mich. — Health insurance companies must spend at least 80 percent of premium revenues on patient care or rebate policyholders the difference, under a federal ruling today that benefits Michigan consumers and patients. The ruling denies a Michigan Office of Financial and Insurance Regulation (OFIR) waiver application that would have diverted more than $53 million in projected consumer rebates back to commercial insurance carriers in Michigan.

“Today’s decision is a significant defeat for the insurance lobby and one that will allow our state’s consumers to rightfully keep more than $53 million of their own hard-earned money,” said Don Hazaert, Director of Michigan Consumers for Healthcare (MCH), the state’s largest advocacy organization for healthcare consumers. “This ruling places the focus on the best interest of the consumer and ultimately compels health insurance companies to spend more premium dollars on direct care rather than on company profits and expenses.”

MCH, which includes more than 100 member organizations dedicated to advocating on behalf of Michigan healthcare consumers, coordinated a grassroots campaign to raise awareness among state residents about what’s at stake in this ruling.

Today’s ruling came from the U.S. Department of Health and Human Services (HHS), which denied an application from OFIR seeking a waiver from the Affordable Care Act (ACA) that would allow commercial insurance carriers to keep up to 35 percent of all premiums paid, rather than the 20 percent they are currently allowed under law. If the waiver had been approved, commercial carriers would have been allowed to pocket more than $53 million in premiums over the next three years that would normally have been rebated back to consumers under the ACA.

“It’s good news that the waiver request was denied,” said Eric Schneidewind, president of AARP Michigan. “The requirements in the Affordable Care Act set forth a reasonable and fair standard that will help control the cost of insurance premiums paid by consumers, and help ensure that insurance policies deliver value for consumers.”

The HHS ruling upheld a regulation known as the “medical loss ratio” provision of the Affordable Care Act. Starting Jan. 1, insurance companies that fail to use at least 80 percent of premiums for care and quality improvements will be required to provide a rebate to their customers starting in 2012.

“This ruling also benefits consumers by making the insurance marketplace more transparent and making it easier for consumers to purchase plans that provide better value for their money,” Hazaert said. “Thanks to the decision made by HHS, Michiganders will get better value for their health insurance premium dollar beginning January 1. These new rules are an important step to hold insurance companies accountable and increase value for consumers.”

More information about the medical loss ratio is available at www.consumersforhealthcare.org. The regulation and other technical information are available at http://cciio.cms.gov/programs/marketreforms/mlr/mlr_michigan.html.  To view the HHS ruling click here.