Georgia seeks easing of insurance rule

Georgia plans to apply for an exemption to new rules requiring health insurers to spend at least 80 percent of the premium dollar on medical care.

The insurance spending rules, part of the health care reform law, were presented Monday by the U.S. Department of Health and Human Services. They would allow consumers to get a rebate if insurers did not meet the required spending level.

But state Insurance Commissioner John Oxendine wrote HHS in October requesting information about applying for an exemption for individual insurance policies. That 80 percent mark, Oxendine wrote, ‘’would disproportionately impact the [insurance] carriers and destabilize Georgia’s increasingly competitive individual market.’’

Oxendine said Tuesday that the state will ask for a more gradual phase-in of the 80 percent rule for individual plans until 2014. That’s when the reform law — if it survives legal and political challenges — is fully implemented.

Oxendine, who leaves office Jan. 10, said he’s not interested in challenging the rules for other insurance plans. That would include the ‘’small group’’ market of health plans that cover two to 50 people,  as well as health plans that have more than 50 people, where the new federal law requires insurers spend 85 percent of the premium dollar on medical care. The new rules take effect Jan. 1.

Three other states – Iowa, Maine, and South Carolina—have also asked for an adjustment to the rules. Kaiser Health News reported that HHS says states may apply to have the requirement adjusted if meeting the 80 percent mark would destabilize their individual market.

HHS gave guidelines Monday on how states can apply for a waiver to the spending requirements, Oxendine’s office said. The portion that insurers spend on care is called a ‘’medical loss ratio.’’

Oxendine said the market for individual health insurance has been historically dominated by Blue Cross and Blue Shield of Georgia, which at one point sold roughly 80 percent of these policies in the state. Recently, though, ‘’we’ve seen smaller plans whittle away at the dominance of Blue Cross,’’ he said.

Those insurers, which he said include Coventry, Golden Rule and Assurant, ‘’will have trouble meeting these targets,’’ Oxendine said. The insurers said they would have to re-evaluate staying in the Georgia market if the requirement went into effect in January, Oxendine said.

“You need competition,’’ Oxendine said. If insurers drop out of the individual market, he said, consumers will have less choice in health plans.

Cindy Zeldin, executive director of Georgians for a Healthy Future, a consumer advocacy group, said her organization is interested in seeing the evidence that the Georgia insurance department gives to HHS in seeking a waiver.

The new rules on medical loss ratios “are good for consumers,’’ Zeldin said. “There was a thoughtful process to develop them. They encourage transparency and better value for  consumers.’’

Individual health insurance policies in recent years have drawn many consumer complaints over coverages and pricing, in Georgia as well as nationally.

Oxendine said the Georgia insurance commissioner has no power to review health insurance premium rates before they go into effect.

The Associated Press reported that industry experts said the final regulations wound up being more manageable than investors initially feared. Analyst Les Funtleyder, who covers the insurance industry for Miller Tabak, noted that HHS has wide latitude to adjust the rules to prevent market disruptions.

“From an expectations point of view, these are rules that managed care can live with in 2011,” he said.

The regulations unveiled by HHS follow closely the recommendations by the National Association of Insurance Commissioners. “No one is going to lose their coverage,” said Jay Angoff, head of the HHS office of insurance oversight.

Starting in 2012, as many as 9 million customers could get rebates averaging $164, officials estimate. It could come in the form of a discount on premiums or a payment by check or credit card.