PPACA's Changes Kick In Even As Technical Work Continues

Requirements under the Patient Protection and Affordable Care Act kicked in today even as the real work to make the law work continue to be developed.

During a meeting with President Barack Obama, commissioners from 34 states and jurisdictions discussed technical issues critical to making the law work. The meeting also included Secretary of Health and Human Services Kathleen Sebelius and Secretary of Labor Hilda Solis and top Administration advisors from the White House, including Stephanie Cutter, Assistant to the President for Special Projects and Nancy-Ann DeParle, Counselor to the President and Director of the Office of Health Reform.

In a press briefing after the gathering, leadership of the National Association of Insurance Commissioners, Kansas City, Mo., discussed key issues such as phasing in medical loss ratio requirements in an effort to prevent the possibility that insurers in the individual market may stop writing business.

Under the law, 80% of premium must be applied to claims. Present at the briefing was Jane Cline, NAIC president and West Virginia insurance Commissioner; Susan Voss, NAIC president-elect and Iowa insurance commissioner; Kevin McCarty, NAIC vice president and Florida insurance commissioner; and Sandy Praeger, past NAIC president and Kansas insurance commissioner.

Praeger said that one of the roles of states will be to provide accurate information to consumers to counter inaccurate information that is publicly available.
Concern over a potential market disruption caused by the new MLR requirements is raising concern in a number of states including Florida, Iowa and Maine. The Florida department will hold a hearing on Sept. 24 to gather concrete evidence about the disruptions, says McCarty. Iowa’s Voss and Maine’s Superintendent Mila Kofman have both sent letters to HHS requesting phase-in periods through 2014, according to the discussion.

West Virginia’s Cline said that flexibility is needed because there are some instances such as agent commissions which might not be flexible because they are multi-year contracts that are bound by contractual law.

Iowa sent a letter on Sept. 21 making the request for a phase in through 2014, according to Voss, because several carriers in her state have indicated that they may leave the market.

The concern of carriers, Cline continued, is that they could actually operate at a loss, a possibility that increases for start-ups with more overhead who are not yet benefitting from the law of large numbers afforded larger carriers who cover more people.

Praeger added that there is concern among some carriers that if they do not meet MLRs, they may need to issue rebates. And, Cline noted that in states such as West Virginia where MLRs are in the 60% range, an increase to 80%, could have a major disruption. McCarty noted that it is a paradigm shift and that not all companies will be successful by virtue of a phase-in. Some companies may have to adjust their business plans, he added.

When asked about federal financial aid to states to help them in their work, Praeger said that in addition to an initial $46 million grant, there may be additional aid to help with establishing rate authority. However, she said, going forward the process will be more needs based and more competitive. State agencies including state insurance departments, Medicaid directors and governors through the National Governors Association, Washington, are working together to try to ensure there is sufficient aid to help with the law’s new implementation, she added.