Guam seeks MLR waiver

The territory of Guam is seeking relief from a provision in the federal health reform law that requires insurers to spend the bulk of member premiums on direct medical care.

Guam is exempt from most provisions of the Affordable Care Act, but the medical-loss ratio, which requires insurers to spend 80% of member premiums on the individual market and 85% of member premiums on the group market on medical care does apply, according to HHS.

In a letter (PDF) to HHS, John Camacho, Guam's acting banking and insurance commissioner, wrote that Guam's health plans cannot afford this requirement because of the dearth of on-island medical facilities and high cost of sending patients off-island for treatment and arranging their care and travel. Guam is seven hours via plane from Hawaii. Many patients instead receive care in Japan, South Korea and the Philippines, which are about three hours by plane, according to the letter.

The sole health plan that offers individual policies on Guam is threatening to exit the market if the medical-loss ratio rule is enforced, Camacho wrote. Guam is seeking a 65% medical-loss ratio through 2013 for the individual, small- and large-group markets.

States and territories can request reprieves from the medical-loss ratio rule if they can show that their insurance markets will be disrupted as a result. So far, nine states have applied for this relief, and HHS has granted an adjustment to the rule to Maine.