Press Release: HHS Unveils Medical Loss Ratio Rule with broker fees included New medical loss ratio regulations make insurance marketplace more affordable

HHS Unveils Medical Loss Ratio Rule with broker fees included

New medical loss ratio regulations make insurance marketplace more affordable

For Immediate Release

Contact:  Wafa Dinaro

313-622-7038/[email protected]

LANSING, Mich. – Michigan’s largest healthcare consumer voice organization, Michigan Consumers for Healthcare (MCH), is praising the Department of Health and Human Services (HHS) for ensuring that health insurance companies spend at least 80 percent of consumers’ health insurance premiums on medical care rather than on profits, overhead,  marketing and insurance/brokerage fees. The MCH Coalition, which consists of more than 100 member organizations dedicated to advocating on behalf of the healthcare consumer, indicated that the HHS decision was a critical victory for consumers.

HHS today released its final medical loss ratio rule.  According to an HHS press release, the rule will ensure that health insurance companies spend at least 80 percent of consumers’ health insurance premiums on medical care.  If the full 80 percent is not put back into patient care, a consumer rebate must be issued.  The HHS rules clarify that broker fees are not a medical expense and should not be funded from the 80 percent premium share that is designated under the ACA to cover only medical-related expenses. This was a defeat to the National Association of Insurance Commissioners (NAIC) which recently passed a controversial resolution calling for broker fees to be regarded as a medical-related expense.

“This important decision places the focus back on the best interest of the consumer and forces health insurance companies to spend more premium dollars on direct patient care,” said MCH Director Don Hazaert.  “The HHS ruling was an important initial victory in the first of several challenges to the new MLR rule being advanced by the insurance lobby and their allies.  While we applaud the decision by HHS, there are still many challenges ahead and Congress could still act on the NAIC’s misguided recommendations.”

Here in Michigan, one private commercial carrier provides an exorbitant 26.7% broker’s share.  The new HHS rule will force insurance companies to create more efficient business models and to use more of their policyholders’ premium dollars on actual medical care.

MCH continues to lead the fight against industry schemes to undermine the MLR.   Michigan’s Office of Financial and Insurance Regulation (OFIR), for example, recently intervened on behalf of the commercial insurance industry, requesting a HHS waiver allowing the commercial carriers to keep up to 35 cents on the dollar in insurance premiums over the next three years. MCH continues to lead the consumer fight against what would be over $53 million in lost rebates to Michigan consumers.  HHS should be making a decision on Michigan’s waiver request before December 17, 2011.

More information about the medical loss ratio is available at www.consumersforhealthcare.org.