Insurers try to weaken spending rule, group says

A grass-roots organization is accusing the insurance industry of trying to undermine the medical-loss ratio provision of the new health reform law.

“There's a new fight in healthcare reform, and if the insurance industry wins it, we lose,” Ethan Rome, executive director of Health Care for America Now, or HCAN, said at a news briefing to release a new report that says insurers are putting pressure on state regulators to weaken this provision, which requires that insurers spend at least 85% of premium dollars for large group coverage and 80% for small group and individual coverage on medical care, starting next year.

This medical-loss-ratio provision is designed to prevent insurers from overspending on administrative costs such as marketing, salaries, underwriting, claims processing and overhead. Whether the law's intent is ultimately respected, however, “depends on how state and federal regulators define which expenditures should be classified as legitimate medical costs,” according to the report.

HCAN cautioned that the insurance lobby wants to redefine medical-loss ratios by pressuring the National Association of Insurance Commissioners “to give insurers vast discretion over what expenses they may classify as clinical and administrative costs.”

America's Health Insurance Plans disputed the findings. “This is a desperate attempt to distract attention away from the fact that these regulations could put at risk important services and benefits that improve the quality of care for millions of patients,” AHIP spokesman Robert Zirkelbach said.