WASHINGTON (Reuters) - Health insurance companies are trying “to water down” critical spending rules being implemented under the recently passed health reform law, U.S. Senate Commerce Committee Chairman John Rockefeller warned the Obama administration on Monday.
Rockefeller, in letters to the U.S. health secretary and a state insurance group, said insurers are seeking to undermine new reforms governing how much insurers spend on medical care versus other costs, known as medical loss ratios (MLRs), and that the Obama administration and state insurance group should be skeptical of any industry proposals.
The Obama administration is working to implement the law, which calls for 85 cents of every premium dollar in large group health plans to be spent on actual medical care rather than administrative costs. For small group and individual health plans, 80 cents of every dollar must cover medical care.
An investigation by committee staff found many health insurance companies already meet the law’s new standards but not for all of their insurance plans or in all markets, Rockefeller wrote in letters to U.S. Health Secretary Kathleen Sebelius and the National Association of Insurance Commissioners (NAIC).
The Democratic chairman said insurers are focusing on two key areas: aggregating information “in a way that conceals important variations in the health insurance market” and classifying “as many expenses as possible” as medical costs.
The reform law had given the NAIC until the end of this year to offer its recommendations on how to categorize insurance spending as either medical care or administrative costs, but Sebelius has asked for a proposal by June 1.
The new MLR rates are set to take effect next year.
Rockefeller posted the letters on the committee's website at commerce.senate.gov
Reporting by Susan Heavey; Editing by Richard Chang and Matthew Lewis
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