Key vote could send some insurers packing

[Heracles 417]

The audacity of the bold part.

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Key vote could send some insurers packing

By Parija Kavilanz, senior writer

October 18, 2010: 11:49 AM ET

NEW YORK (CNNMoney.com) -- Industry experts say more insurers will drop health care coverage or go out of business if they are forced to meet a Jan. 1 deadline that requires them to boost the money devoted to providing care.

The Obama administration is awaiting the recommendation of the National Association of Insurance Commissioners, meeting in Orlando this week, for how and when to implement key changes to the "Medical Loss Ratio" rule.

Under health reform, beginning 2011, insurance companies will have to spend 80% to 85% of the premiums they collect on care instead of toward their own profits and overhead costs.

Prior to reform, requirements varied from state to state. In some cases, insurers didn't have to meet any minimum requirements.

For example, some plans have a 40% loss ratio. That means individuals could be paying $1 for 40 cents of care.

Beginning in 2012 If insurers don't increase that loss ratio to 80 cents per dollar paid, they will have to give customers a rebate for the difference .

Scrambling for coverage. The government has tasked NAIC with voting on the final rules that determine how quickly insurers have to comply with the new regulation.

The insurance industry is on edge, claiming many insurers won't be able to meet the New Year's deadline without causing significant disruption to their businesses.

For that reason, insurers asked the NAIC to consider a "transition" period that allows insurers to gradually phase in the higher requirement.

"A transition plan that provides for an orderly progression to 2014 is essential," Karen Ignagni, president of America's Health Insurance Plans, wrote in a letter to NAIC last week, adding that the consequence of not phasing in the change would be a "potential disruption of coverage for millions of Americans and reduced competition prior to 2014 market reforms."

Survival of the fittest. One insurance industry expert agrees that the new requirement could either knock some carriers out of business or force them to drop customers.

"The issue that some carriers will leave the market as a result of this is real," said Deborah Chollet, senior fellow and health economist with Washington-based Mathematica Policy Research.

"Some companies just won't be able to make it," she said.

Setting the new standard is the government's way of forcing insurers to become more efficient.

"It's survival of the fittest," she said. "Big carriers can meet the new rule."

Even if the smaller carriers exit the market, Chollet said that most individuals will easily be able to find coverage from large carriers who can meet the new standards.

Phase in transition. The NAIC has raised some concerns about whether insurers can meet the 80% threshold by next year and suggests that a phased in approach would be best.

"In the absence of the transitional period, the markets of some states are likely to be 'destabilized,'" the group said.

"We have some carriers who have already exited the market in Iowa. Others are dropping health insurance products," said Iowa Insurance Commissioner Susan Voss, president-elect of the National Association of Insurance Commissioners.

Some states, including Maine and Iowa, have already asked for an extension on the Jan. 1 deadline.

In a letter last week to Health and Human Services Secretary Kathleen Sebelius, the group said that all states may need a phase-in approach.

"Several companies are telling us they can meet the MLR requirement in three years, but not now," Voss said.

Chollet disagreed. "They've already had six to eight months to prepare for this. If they're asking for more time, I would say push the deadline to April 1," Chollet said. To top of page

[Wayne and Claudia 40]

show me where in the Constitution does it state that Government shall dictate how much profit a company can make and how that company should distribute that profit? This is old news...get with the game. It is Obama's plan and the dems to put all insurance companies out of business. Why? Oh my naive friend...that way the masses will be 100% dependent upon government for their care....like little sheep being herded to market.

[luckytxn 2,264]

Lets see. The health care insurance industry makes around 4-5 percent profit now on average. That overhead they are saying that they are spending too much on is the cost of doing business. So if they are to make that federally mandated target then the industry will have to raise their rates a lot. A whole lot. Then to top it off the Feds have mandated that the industry now has to pay for many other things so that means more money from US. Of course with that huge inflow of money to the medical industry that will mean a huge inflation so in the future we will see sky rocketing costs above and beyond the Federal mandated things. I guess the Feds will have to tell the medical providers that they now are under a mandate to not charge more and that may work even though it never has in the past.

Right now health care is from one fifth to one sixth of the American economy so now the Feds control most of the economy. Well how great is that? Of course the Socialists who feel that the Feds are now our keepers as it should be that will be seen as great news.

[Pinocchio Liberal 268]

Just got the notice today on how Im gonna get raped by hope and change!

[luckytxn 2,264]

Just got the notice today on how Im gonna get raped by hope and change!

I got mine last month.

[Pinocchio Liberal 268]

I got mine last month.

You usin tampons or kotex?

[luckytxn 2,264]

You usin tampons or kotex?

Sanitary napkins for now but going to purchase the industrial size next year from what I have been told we have coming. By the way I thought we were going to be raping and pillaging the rich and us middle class was going to be reaping the bounty.

[Dan J 277]

Lets see. The health care insurance industry makes around 4-5 percent profit now on average. That overhead they are saying that they are spending too much on is the cost of doing business. So if they are to make that federally mandated target then the industry will have to raise their rates a lot. A whole lot. Then to top it off the Feds have mandated that the industry now has to pay for many other things so that means more money from US. Of course with that huge inflow of money to the medical industry that will mean a huge inflation so in the future we will see sky rocketing costs above and beyond the Federal mandated things. I guess the Feds will have to tell the medical providers that they now are under a mandate to not charge more and that may work even though it never has in the past.

Right now health care is from one fifth to one sixth of the American economy so now the Feds control most of the economy. Well how great is that? Of course the Socialists who feel that the Feds are now our keepers as it should be that will be seen as great news.

Considering that there are countries who health systems spend 95% or more of every dollar on care, 85% is peanuts.

[Dan J 277]

show me where in the Constitution does it state that Government shall dictate how much profit a company can make and how that company should distribute that profit? This is old news...get with the game. It is Obama's plan and the dems to put all insurance companies out of business. Why? Oh my naive friend...that way the masses will be 100% dependent upon government for their care....like little sheep being herded to market.

Considering private industry has proved to be inefficient at delivering health care, is that a bad thing?

[Mr. Big Dog 10,747]

Considering that there are countries who health systems spend 95% or more of every dollar on care, 85% is peanuts.

Indeed. But apparently US companies can't be asked to meet generally acceptable efficiency standards.

That aside, what's really at issue is that the inductry is essentially asking to have the increased loss ratio deferred to the time when the insurance mandate kicks in.

Cutting overhead shouldn't really be that hard for the companies since they really shouldn't have much use for their armies of claims deniers down the road.

[ready4ONE 5,400]

None of the RNW's caught that many insurers are dropping their high profit margin 'products.' I guess they will just have to miss -60% returns on their health insurance investments...