Commissioner concerned about MLR » State News » Pryor Daily Times

OKLAHOMA CITY – Oklahoma Insurance Commissioner John D. Doak expressed grave disappointment Wedne-sday that his state’s request for a waiver on Medical Loss Ratio requirements from the U.S. Department of Health and Human Services was rejected. “This decision could lead to a massive disruption of our insurance markets in Oklahoma,” Doak said. The Medical Loss Ratio in essence is a calculation of what percentage of each policyholder dollar is spent on delivering benefits or improving care, versus how much is spent on administration and profits. The Patient Protection and Affordable Care Act has set an 80 percent minimum MLR for companies doing business in the individual and small-group health insurance markets; an 85 percent MLR for large-group plans. Doak and the Oklahoma Insurance Department in September sought a gradual phase-in of the 80 percent ratio in the individual market only, rather than immediate and strict enforcement of those targets by the Department of Health and Human Services. No changes were requested by Oklahoma for the small-group and large-group markets. Noting the disproportionate and potentially damaging effect of the high MLR on certain smaller companies and the possible impact in particular on Oklahoma’s rural communities, Doak and the OID requested that insurers be required to meet a 65 percent MLR for 2011, 70 percent in 2012 and 75 percent in 2013.   said Mike Rhoads, Deputy Commissioner of Life and Health Insurance at OID. “We wanted to keep coverage available, to keep all carriers large and small in our individual market.” Meeting MLR requirements should be easier for much larger carriers, which can spread the cost of administration over a vast base of policyholders. Conversely, Doak believes certain smaller companies might be forced to comply with PPACA’s MLR provisions by reductions in force that destroy Oklahoma jobs, meanwhile limiting consumers’ access to the counsel of licensed agents and decreasing the availability of customer service to policyholders. Some small companies might decide to leave the Oklahoma market altogether, surrendering progressively larger segments of the market to one or two major carriers and reducing consumer choice. “Competition fosters innovation in the type of insurance products available, competitive pricing that reduces policyholder premiums, and attention to detail in customer service as a means of retaining business,” Doak said. “Simply put, competition is good for consumers and these MLR requirements could very well reduce competition in Oklahoma’s insurance markets.”