The U.S. Department of Health and Human Services today rejected a waiver requested by the Walker administration that would have allowed Wisconsin insurance companies to keep more than 20 percent of their premium dollars for profits and overhead.
The request for a waiver from the Medical Loss Ratio requirement under President Barack Obama’s Affordable Care Act was made in October by the Wisconsin Gov. Scott Walker’s administration.
Under the Affordable Care Act, consumers insurance companies are required to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement, rather than on overhead costs. If they don’t, the insurance companies will be required to provide a rebate to their customers, starting in 2012. The policy is known as the “medical loss ratio” (MLR) provision of the Affordable Care Act.
Insurance plans in some markets spend a larger percent of premiums on administrative expenses and non-health-related costs, than job-based health plans. Recognizing the variation in local insurance markets, the Affordable Care Act allows states to request a temporary adjustment in the MLR ratio for up to three years, to avoid disruptions to coverage in the individual market.
The Wisconsin Office of the Commissioner of Insurance requested an adjustment of the medical loss ratio (MLR) standard to 71 percent, 74 percent, and 77 percent, for reporting years 2011, 2012, and 2013, respectively.
However, the U.S. Department of Health & Human Services rejected the Wisconsin application for a waiver today.
“In general, Wisconsin’s application shows that the state has a competitive individual health insurance market, which should ensure that consumers continue to receive adequate coverage…This determination gives consumers the maximum benefit of the MLR provision and ensures that consumers are receiving value for their premium dollar,” the federal agency said.
"This is a victory for Wisconsin health care consumers, who will receive over $14 million in rebates from health insurance companies with excessive profits and overhead," said Robert Kraig, executive director of Citizen Action of Wisconsin, a liberal activist group. "Given the pain skyrocketing health insurance premiums are causing throughout Wisconsin, and rampant health insecurity which threatens so many working families, it is stunning (and highly revealing) that the Walker administration would seek to put industry profits ahead of the interests of consumers. Fortunately the federal government rejected this attempt to undermine health insurance industry accountability."
A spokesman for Walker was not immediately available for comment on the ruling. This report may be updated to include that response, should it become available.
The official rejection notice is available here: http://cciio.cms.gov/programs/marketreforms/mlr/wi_mlr_fact_sheet.html.
– BizTimes Milwaukee
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