Florida Seeks Waiver from Medical-Loss-Ratio Requirements

Published May 31, 2016

Florida officials have joined a growing number of states and companies seeking waivers from the new medical-loss-ratio requirements imposed by the federal government under President Obama’s health care law.

Florida insurance commissioner Kevin McCarty requested the waiver from requirements announced by Secretary Kathleen Sebelius of the U.S. Department of Health and Human Services (HHS) in late November 2010, which require health insurers to use 80 to 85 percent of premiums on health care. The law would require insurers to meet this ratio in 2011 or pay rebates to customers if the limits are not met.

Florida, which currently imposes a ratio of 65 to 70 percent, is seeking a three-year delay in implementing the regulation. Other states that have already requested waivers include Maine, South Carolina, Iowa, and Georgia.

Ratios Could Disrupt Insurers

According to Thomas Perrin, director of public affairs at the Florida-based James Madison Institute, these states cite concerns the regulation would disrupt their individual markets.

“I believe the waiver is potentially a good option for the state to pursue to give health insurance companies ample time to adjust their business models to the new medical loss ratio requirements,” says Perrin.

Perrin says the ratio requirements are likely to raise prices for health insurance, instead of lowering them.

“If Florida does not receive this waiver, consumers could see an abrupt drop in the number of services offered by their insurance provider,” Perrin said. “In the same way that businesses almost always pass along the burden of tax increases to consumers, insurance companies affected by this increase in the Medical Loss Ratio will more than likely raise premiums to try to compensate for their loss in profit,” Perrin said.

Political Payoffs, Revenge?

Florida has had a good track record in obtaining health care related waivers, most notably the 1115 Medicaid Reform Waiver in 2005, which allowed for a pilot project in specific counties to place Medicaid patients in private managed care plans. However, Perrin maintains that although other states may receive waivers, Florida might pay a penalty for being a leading plaintiff in a court case challenging the constitutionality of portions of Obama’s law.

“With Florida leading the way in the multistate lawsuit against the administration’s Patient Protection and Affordable Care Act, the likelihood of receiving any new waivers relating to health care has been greatly diminished,” said Perrin.

According to Christie Herrera, director of the HHS Task Force at the American Legislative Exchange Council in Washington, D.C., the lengthy list of companies and unions which have already received waivers could indicate political concerns will indeed factor in to decisions about which states receive waivers.

“It’s interesting that thirty companies and unions have gotten a waiver before the medical-loss-ratio rules are even written,” said Herrera. “We’ll see which states get approval. This is the new age of ObamaCare: Mandates for everyone, unless you’re politically powerful enough to escape them.”

Sarah McIntosh, esq. ([email protected]) is a constitutional scholar residing in Lawrence, Kansas.