Nearly 10% of Health Insurers Leaving Indiana; State Seeks MLR Waiver

Indiana Insurance Commissioner Stephen W. Robertson has announced he is seeking a waiver on behalf of Indiana from the federal Patient Protection and Affordable Care Act’s (ACA) 80 percent minimum medical loss ratio (MLR) for individual, major medical health insurance.

The Indiana Department of Insurance said that nearly 10 percent of the state’s health insurance carriers have withdrawn from Indiana because of the MLR requirement.

MLR is a ratio expressed as the total losses paid out in claims plus adjustment expenses divided by the total earned premiums.

Indiana is requesting permanent relief from the 80 percent MLR requirement for consumer driven health plans (CDHPs). CDHPs have higher deductibles than traditional health insurance, but consumers enjoy lower monthly premiums in return.

CDHPs encourage individuals to consider the costs of health care when they are younger. In healthy years, individuals can build up their health savings accounts (HSAs) and use these savings to pay for health care when they are older.

Currently, Indiana has the fifth highest percentage of CDHPs; 8.1 percent of the state’s population or approximately 360,000 Hoosiers under the age of 65 with private health insurance utilize CDHPs/HSAs.

Robertson’s letter cited the Gov. Mitch Daniels’ signature Healthy Indiana Plan (HIP), which is a Medicaid alternative that essentially operates as a CDHP. Robertson’s letter also states that nearly 70 percent of the 29,000 state, non-university employees utilize this type of insurance.

The Commissioner proposed an alternative approach to implement MLR. In 2011, 2012, 2013 and 2014 MLR will be phased-in at 65 percent, 68.75 percent, 72.5 percent, 76.25 percent and 80 percent, respectively. The waiver is requested through Jan. 1, 2015, because of the carriers’ practices of maintaining the same premium — typically one year — for an individual consumer.

Among the market changes that become effective on Jan. 1, 2014 are: guaranteed issue of individual policies; mandated coverage; merging of the state’s high risk pool with the standard market; and implementation of essential benefits.

The Commissioner’s waiver request seeks exemption for new market entrants through 2014, and defines a new market entrant as a carrier that has not participated in Indiana’s individual market in the previous 10 year period.

Robertson said, “A phased-in approach of ACA’s 80 percent minimum MLR standard will mitigate some of these consequences, but if HHS denies this waiver, consumers’ choices will be further limited and fewer carriers will be inclined to offer CDHPs because of inability to meet MLR.”

Source: Indiana Department of Insurance

Topics Carriers