Insurance companies in Kentucky have been granted a waiver from a provision of the health care law that requires insurers to spend at least 80% of the money they collect from premiums on improving medical care. The waiver does not remove mandate, however, and insurers will still need to spend 75% of their premiums toward medical care. According to federal law, if companies do not follow this mandate, they must refund the money to policyholders.
The state’s Department of Insurance petitioned the federal government for a waiver in an effort to help smaller insurance companies smoothly transition into new regulations. Insurance Commissioner Sharon Clark, in a statement in WFPL News, says that small businesses are subject to the same administrative costs as their larger counterparts. By obtaining the waiver, Clark hopes that the financial burden imposed on these small insurers will be placated.
Kentucky is the sixth state to be awarded with such a waiver. Those that have been unable to attain one have experienced an exodus of insurance companies, both big and small. Insurers are concerned that the new regulations will cut deeply into their profits and have thus sought out more promising territory in states who have more lenient regulations. Kentucky has thus far been immune to this trend and the waiver may prove to keep the state’s insurers around indefinitely.
The Department of Health and Human Services will review the waiver in one year’s time. If the insurance market, as well as the insurance companies, is determined to be healthy, the state will have to comply with the 80% mandate on premiums.