Maine says new U.S. rule could hurt health insurance market

Dinah Wisenberg Brin
Dow Jones Newswires

Maine’s insurance regulator, concerned about disruption to the state’s market for individual policies, has asked the Obama administration for a waiver of a minimum medical-spending requirement that the nation’s new health overhaul will place on insurers selling such coverage.

The request reflects the complex nature of a key piece of the overhaul, requirements that insurers by next year spend at least a certain percentage of premium dollars on patient care, in a measure known as the medical loss ratio, or MLR.

As regulators continue to hammer out the details of how the law will be implemented, Maine’s superintendent of insurance, Mila Kofman, wrote to U.S. Health and Human Services Secretary Kathleen Sebelius earlier this month seeking a waiver of the 80% minimum MLR requirement for individual health insurance policies in that state until 2014.

The overhaul goes more fully into effect in 2014, when Americans without group coverage will be able to buy individual policies through state exchanges regardless of pre-existing conditions. Regulators and the industry have expressed concern that until then, the new spending requirements could force some insurers to exit markets, causing disruption for patients.

While expressing her support for health coverage reforms, Kofman said that ” absent a waiver, I believe that the federal MLR standard may disrupt our individual health insurance market,” in which only two insurers currently sell coverage. “Loss of one of the two insurers would have a serious destabilizing effect in our individual market.”

One insurer, privately owned HealthMarkets Inc., indicated to Kofman that it could keep operating in Maine under the state’s current 65% MLR standard, “but would probably need to withdraw from this market if the minimum loss ratio requirement were increased,” she wrote.

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