For Immediate Release: December 2, 2011

For More Information, Please Contact: Greg White, Public Relations Coordinator 207-622-7083 (o); 202-674-4491(c) gwhite@mainecahc.org

Consumer Group Commends U.S. Department of Health and Human

Services Medical Loss Ratio Decision

Department's Decision Ensures Policyholders' Premiums will go Towards Medical Costs

(Augusta)  Consumers for Affordable Health Care (CAHC) applauded today's decision by the U.S. Department of Health and Human Services (HHS) to reject a recommendation by the National Association of Insurance Commissioners (NAIC) that would have substantially weakened medical loss ratio (MLR) standards established in the Affordable Care Act (ACA).  The recommendation would have allowed broker and agent fees and commissions to be excluded from the administrative portion of the MLR calculation.  Maine Bureau of Insurance Superintendent Eric Cioppa abstained from voting when the NAIC voted on the resolution last month. 

The MLR is a transparency measure that enables consumers and small businesses to know how much of their premium dollar was actually spent by their insurance company on medical care.  The final MLR regulation requires insurance companies to refund or rebate money to policyholders and contract holders if the company fails to spend 80 cents on the premium dollar for medical care for individual or small business customers (85 cents on the dollar for large businesses). The Health Actuarial Task Force to the "B" Committee of the NAIC calculated that amount to be over $2 Million for Maine consumers and businesses and over $2 Billion to consumers and small businesses on a national basis.

"Today's decision is a major victory for consumers and small businesses.  It continues to ensure that the money spent on your premium actually goes towards medical costs," said CAHC Executive Director Joe Ditré.  "We appreciate the work brokers and agents do to best inform their clients about insurance policies, and their commissions need to be included as administrative costs of the insurance company.  The potential rebates policyholders could receive under a robust MLR standard are significant in today's economy."

Although the decision was made on the federal level, it has great impact on the state level as earlier this year Maine enacted Public Law 2011, Ch. 90.  The new law increased rating factors and has resulted in higher rates for many small businesses - especially those with older workers in rural areas of Maine.  It is particularly important that full MLR rebates be available to help defray their increased premiums where their insurer fails to spend enough on actual medical care.  

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Consumers for Affordable Health Care is a non-profit, non-partisan organization that has been helping Maine people get quality, affordable health care for more than 20 years. If you have any public or private insurance questions please call our toll free consumer HelpLine at 1-800-965-7476.  

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