Iowa has received a waiver allowing an adjustment to some transitional Medical Loss Ratio (MLR) provisions of the federal Affordable Care Act in Iowa.
The Department of Health and Human Services (HHS) granted the waiver request from the state insurance department but modified the target proposed by Iowa Insurance Commissioner Susan Voss.
Iowa’s original request had been for a 2011 standard of 60 percent MLR standard to be used, but the HHS response instead set the MLR standard to be met in 2011 as 67 percent of premium, and in 2012 as 75 percent of premium.
The final standard of 80 percent will be implemented in 2013 and beyond. The adjustment was requested and granted in recognition of the inability of some Iowa companies selling individual policies to remain in the market under the initial requirements.
Under the MLR provision, insurance providers must spend 80 to 85 cents of every premium dollar on health care services and only 15 to 25 cents on administrative costs, depending on whether they’re insuring individuals, small groups or large groups.
Currently, agent commissions are included in administrative costs.
Topics Profit Loss Iowa
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