On Saturday, an important federal health insurance regulation will take effect, Maine’s request for an exemption is still to be determined. Though many other states are expected to file exemptions, they are the only state that has requested an exemption to the Affordable Care Act regulation; their goal is to have health insurance companies keep a minimum “medical loss ratio” of 80%. Companies will have to spend about 80 cents of every insurance premium dollar for health care services and the other 20 cents on operational expenses such as marketing and administration. In Maine the current minimum medical loss ratio is 65%, Mila Kofman, a supporter of national health care reform, would like to keep it that way.
Kofman expressed in a letter to Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, that applying the 80% medical loss ratio in Maine “would have a serious destabilizing effect in our individual [insurance] market.” There are only two insurers competing effectively for the Maine market, Kofman said, “One had already indicated its intent to pull out of the state if the higher loss ratio were imposed.” In Kofman’s letter she said, “Based on preliminary discussions I had with [MegaLife], the company would probably need to withdraw from this market if the minimum loss ratio requirement were increased.”
With the new loss ratios, which are calculated into insurance rates, businesses not spending the proper amount on health care will need to repay the difference to the consumers. For the next three years, states can request an adjustment if they can prove that the 80% medical loss ratio is likely to weaken competition in their individual market. By 2014, all Americans will be required to purchase health benefits. The increased loss ratio should not be a hardship on the consumers or companies they serve.