Medical Loss Ratio Debate Drags On, Drags Down Stock Prices

Main Category: Health Insurance / Medical Insurance
Article Date: 23 Sep 2010 - 4:00 PDT

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'Medical Loss Ratio Debate Drags On, Drags Down Stock Prices'

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The failure to clearly define the key health law requirement that many insurers must spend at least 80 percent of premium dollars on health services has left investors tepid about health plan stocks and has complicated corporate decisions in the sector, Bloomberg reports. The National Association of Insurance Commissioners, a group of state regulators, were supposed to offer a definition to federal policy makers by June, but their deadline was pushed back to October. A large amount of money is at stake: The decision could cost WellPoint plans, for instance, up to $264 million next year according to one analyst, Ana Gupte of Sandford C. Buerstein & Co. Gupte added that the delays have helped push industry stocks down for six months (Nussbaum, 9/22).

As it turns out, the president is meeting with these state regulators to address this and other issues today, The Hill's Healthwatch Blog reports. "President Obama will meet with state insurance commissioners on Wednesday for a working session ahead of his comments on the six-month anniversary of healthcare reform. Topics under discussion will include health insurance rate review, the definition of what constitutes 'unreasonable' rate increases and the medical loss ratio, senior administration officials said." The regulators are coming out with a draft next week, and it appears the White House wants to make sure everyone's on the same page to avoid health officials from having to overrule their recommendations. One difference of opinion is that the regulators think more taxes should be included in the health services column, as opposed to as administrative expenses (Pecquet, 9/22).

CongressDaily adds: "Though details are scarce, NAIC and [health Secretary Kathleen] Sebelius have worked closely to put the finishing touches on what's sure to be a highly scrutinized proposal that would define how much of the premium dollar must be spent on care versus back-office expenses" (DoBias, 9/22).

This information was reprinted from kaiserhealthnews.org with kind permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery at kaiserhealthnews.org.

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