The Patient Protection and Affordable Care Act requires insurers in the individual market to spend at least 80% of premiums on medical care or rebate the difference to customers starting in 2011. Federal health officials may grant exceptions in states where the law would destabilize the individual market. Federal officials may consider whether insurers will exit the market and reduce competition or raise consumers' costs, among other possible exemption criteria.
New Hampshire and Nevada are among 11 states to request an exemption. New Hampshire sought to lower the premium spending requirement, known as the medical-loss ratio, to 70% through 2013. Nevada asked federal officials to lower the medical-loss ratio requirement to 72% in 2011.
Maine requested the premium spending requirement be dropped to 65% through 2013. In March, the CMS granted Maine's request, as long as Maine updated its information in 2012. Maine said the second-largest insurer in the state's individual market, Mega Life & Health Insurance Co., would likely withdraw if required to spend 80% of premiums on medical care. As of last September, Maine's individual insurance market covered 37,000 and Mega accounted for 37% of the market.