Administration Unveils MLR Rules

Politico (11/23, Haberkorn) reports, The Obama administration on Monday outlined rules to restrict health insurers' spending beginning next year, a key provision of the health care overhaul that aims to improve value for consumers. These "rules will have vast implications for how insurance companies spend money as well as for other aspects of the health care industry. President Barack Obama, in an email released Monday, said the rules 'will make our health care marketplace more transparent and ensure you get the best value for your premium dollars. And it is just one of the many parts of the Affordable Care Act that are already making our health care system stronger.' Meanwhile, HHS Secretary Kathleen Sebelius "on Monday said insurers' administrative costs, marketing and 'in some cases, rising salaries and bonuses' have grown far too much in recent years."

The AP (11/23, Alonso-Zaldivar, Murphy) reports, "The regulation unveiled by the Health and Human Services department calls for insurance companies to spend at least 80 cents of the premium dollar on medical care and quality. For employer plans covering more than 50 people, the requirement is 85 cents," and "insurers that fall short of the mark will have to issue their customers a rebate." Notably, "administration officials said it will prevent insurers from wasting valuable premiums on administration, marketing and executive bonuses. 'While some level of administrative cost is certainly necessary, we believe that they have gotten out of hand,' said...Sebelius."

The Washington Post (11/23, Goldstein) reports, "The Obama administration issued rules on Monday defining a promise to consumers in the new federal health-care law that insurers will spend at least $4 out of $5 they collect in premiums on medical services and other efforts to improve patients' health." These "rules say that, starting in January, insurers must reveal far more information than required in the past about how they allot their money." Sebelius said that they will "guarantee that consumers get the most out of their premium dollars."

The New York Times (11/23, A22, Pear) says that the regulations "will require many health insurance companies to spend more on medical care and allocate less to profits, executive compensation, marketing and overhead expenses." Notably, the "rules, intended to benefit consumers, vastly expand federal authority to direct the use of premiums collected by companies like Aetna, Humana, UnitedHealth and WellPoint. While some states have had such requirements, Monday's announcement is the first such mandate by the federal government and grows out of the new national health care law." Sebelius pointed out that because of the rules, "Millions of Americans will get better value for their health insurance premium dollar."

McClatchy /Kaiser Health News (11/23, Appleby) reports, "Millions of Americans might be eligible for rebates starting in 2012 under regulations released Monday, which detail the health care law's requirement that insurers spend at least 80 percent of their revenues on direct medical care." These "regulations closely follow recommendations that the National Association of Insurance Commissioners sent to the Department of Health and Human Services this fall after months of meetings and debate involving industry and consumer representatives." In response to the new rule, "insurers, who'd objected strongly to the recommendations in October, toned down their criticism Monday, saying the new rules 'take a first step' toward minimizing market disruption for plans sold to individuals," although "it remains possible that the rules could affect employer-offered coverage, America's Health Insurance Plans said in a statement."