The federal Department of Health and Human Services has granted Maine’s request for a waiver of a new rule requiring health insurance companies to spend approximately 80 cents of every premium dollar on actual health care services for their customers. The waiver affects only the individual insurance market here, holding the required spending, known as the “medical loss ratio,” at the current rate of 65 percent until the end of 2013.
Maine’s insurance superintendent Mila Kofman requested the waiver last year after Megalife, one of just three health insurance companies that sell individual, nongroup coverage in Maine indicated it might leave the fragile individual market here if the new medical loss ratio were implemented. That would have left some 14,000 Mainers looking for new, and likely more expensive, coverage. The two other companies that sell individual coverage are Anthem Blue Cross and Blue Shield of Maine and the nonprofit Harvard Pilgrim company that administers the subsidized DirigoChoice program.
In an 18-page letter announcing its decision Tuesday, DHHS administrator Steven Larson reflected on volumes of financial data submitted with Kofman’s waiver application. He granted the 65 percent modification through the end of 2013, pending the submission of updated actuarial data in 2012.
Asked to comment on the decision, Kofman said in an e-mail, “We appreciate the evidence-based approach HHS took with our request and in working with us.”
The new medical loss ratio rule is part of the Affordable Care Act. It goes into effect for policies written or renewed this year. It calls for an 80 percent loss ratio for individual and small group plans and an 85 percent loss ratio for large groups. The rule will stay in effect through the end of 2013, when more affordable insurance options are expected to be available.