Michigan losses fight for medical loss ratio exemption. Consumer could get as much as $89 million in rebates next year

Michigan Health InsuranceMichigan lawmakers have failed to obtain an exemption from the federal government regarding the new medical loss ratio provision of the Affordable Care Act. The provision requires the state’s health insurers to pay no less than 80% of the money they collect from premiums on improving medical care. If insurers cannot meet this standard, they must return the money to policyholders. Legislators in Michigan have been fighting for an exemption, but federal legislators denied the effort early this week.

According to state regulators, consumers may be eligible for $89 million in rebates due to the rule. As many as 340,000 policyholders would be able to claim this money. Insurers will have to issue rebates or credit on health premiums in August 2012 if they cannot meet the federal standard. Regulators have not yet calculated the average amount each policyholder will be eligible for.

Of the dozens of health insurers that sell individual plans, only six currently meet the federal standards. Blue Cross Blue Shield is among these few insurers, having consistently paid 93 cents of each dollar toward improvising medical care since 2010. Federal regulators assert that each of Michigan’s health insurers is capable of meeting the standard with little to no trouble at all. Insurance Commissioner Kevin Clinton issued a statement following the state’s rejected efforts saying that he hopes insurers having trouble meeting the federal standard do not flee the state.

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