Guest Blog: Consumer Health Care Victory!!

Consumer Health Care Victory

By:  Jan Hudson

Michigan consumers won a great victory Monday when the federal government denied the waiver requested by Michigan’s Insurance Commissioner to phase-in, over three years, the higher amount insurers must spend on medical care, known as the medical loss ratio.

With this decision, insurers are required to spend 80 percent of collected premiums on medical care and quality improvements, effective Jan. 1, 2011, as mandated in the Affordable Care Act.

Insurers that do not meet the requirement must rebate the excess amount collected to those who paid the premiums. This ruling is expected to result in $53 million in rebates to Michigan consumers over the next three years, rather than allowing insurers to keep those funds.

The Insurance Commissioner requested a phase in of the requirement over three years (65 percent, 70 percent, then 75 percent), asserting an anticipated “significant disruption in the individual health insurance marketplace” and expressing concern about insurers’ continued presence in Michigan and profitability. 

The federal government, however, conducted extensive research and received extensive comments from organizations and individuals, including a petition signed by nearly 6,000 Michigan consumers, opposing the waiver application. In denying the waiver request, the U.S. Department of Health and Human Services found that:

• Most issuers are either profitable or adjusting business models to reach the 80 percent standard, suggesting no intent to exit.
• All issuers with 2010 medical loss ratios below 80 percent indicated that they are taking steps to meet the standard.
• Michigan is a large, relatively competitive market, with guaranteed issue by Blue Cross Blue Shield and HMOs.

Consumers and consumer organizations, led by Michigan Consumers for Healthcare, pointed out that Michigan should maintain a level playing field, as many insurers already meet the 80 percent requirement, and even if an insurer leaves Michigan, it would have to meet the 80 percent requirement in the new state. They also raised concerns that those insurers with low medical loss ratios may not be providing good value to consumers. 

HHS concluded there was not compelling evidence to support the waiver request and that complying with the ACA mandate will ensure consumers receive better value for their premium dollars.