Iowa requests medical loss-ratio waiver

Iowa is the eighth state to request relief from a provision in the federal health reform law that requires insurers to spend most member premiums on medical costs.

In a letter to HHS Secretary Kathleen Sebelius, Susan Voss, Iowa's insurance commissioner, wrote that the rule “may disrupt our individual health insurance market.”

Starting as early as July, insurers nationwide will be required to spend at least 80% of individual policyholder premiums on medical care. States can apply for a waiver to this rule if they can prove that it would seriously disrupt the individual insurance market in their state.

In Iowa, the dominant insurer, Wellmark, already meets the 80% medical loss ratio standard but “Iowa has a number of smaller carriers, which need time to adjust their business models to comply,” Voss wrote in the letter, dated March 21.

Voss requested a three-year, phased-in approach to the rule, whereby insurers would be required to meet a 60% medical loss ratio this year, a 70% medical loss ratio in 2012, 75% for 2013 and 80% in 2014, according to the letter. Iowa today prescribes a medical loss ratio of between 55% and 60% for the individual market.

Florida, Georgia, Kentucky, Maine, Nevada, New Hampshire and North Dakota have also submitted medical loss ratio waiver requests to the HHS. Only Maine's has been approved.