Del., Ind. seek relief on medical-loss ratio

Indiana and Delaware are the latest states seeking relief from a provision of the federal health reform law requiring that insurers spend 80 cents of every individual premium dollar on direct medical care and quality efforts starting this year. Insurers that don't meet this threshold must rebate the difference to individual policyholders starting next year.

Delaware is requesting a phased-in approach to this medical-loss ratio rule, whereby insurers would have to spend 65% of individual premiums on direct medical care this year; 70% for 2012; 75% for 2013 and 80% for 2014, according to a letter sent to HHS. Delaware currently has an MLR requirement of 60% in the individual market.

Similarly, Indiana is requesting a phased-in approach of an MLR standard of 60% this year; 68.75% in 2012; 72.5% in 2013; 76.25% in 2014 and 80% in 2015, according to its letter to HHS. Indiana does not currently have an MLR requirement for health insurance policies.

Under the federal law, HHS may adjust the rule if states can show that it could destabilize the local individual insurance market. So far, 12 states and the territory of Guam have made these requests, and HHS has granted reprieves to Maine, Nevada and New Hampshire.