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State regulators back plan to require health insurers to spend at least 80% of premiums on medical care

October 22, 2010|By Linda Shrieves

Reporting from Orlando, Fla. — Over the protests of the insurance industry, state insurance regulators meeting Thursday endorsed a proposed federal regulation that would guarantee that a certain portion of health insurance premiums is spent on medical care.

In a vote at the National Assn. of Insurance Commissioners' fall meeting, state regulators agreed to forward their proposal to the U.S. Department of Health and Human Services, which will either adopt or modify the recommendations.

The proposed regulations would require health insurance companies to spend at least 80% of a customer's premium on providing healthcare and medicine. For customers covered by large-group plans, the insurance company must spend 85% of the premium on healthcare.

These spending ratios, known as "medical loss ratios," have been the subject of contentious debates for months. Under the Patient Protection and Affordable Care Act passed by Congress in March, the insurance commissioners' association is responsible for recommending definitions and calculations of the ratios to federal officials.

The new rules will go into effect in January.

"I commend the work of our regulators and staff as we considered a number of very challenging issues as it moved through the committee process," said Jane Cline, the West Virginia insurance commissioner and president of the insurance commissioners' association.

Health and Human Services Secretary Kathleen Sebelius applauded the insurance commissioners' vote and pledged to work quickly to get new medical loss ratio regulation into place.

lshrieves@orlandosentinel.com

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