Washington, D.C. — Consumer Watchdog today applauded the Obama Administration’s decision to reject a bid by politicians in the state of Florida to evade a key consumer protection rule in the health reform law that requires insurance companies to reduce bloated bureaucracies and excessive profits to spend more on actual health care.
The announcement follows the denial two weeks ago of similar efforts in Louisiana and Indiana. The Department of Health and Human Services (HHS) has rejected waivers in 4 states, including Florida, and approved them in 6.
The “medical loss ratio” rule requires health insurers to become more efficient and spend at least 80% of consumer premiums on health care, not excessive overhead, salaries and profits. Consumers will receive premium rebates from insurance companies that fail to meet that standard, beginning in August of 2012. Health insurers must issue premium rebates to consumers if they fail to spend at least 80 cents of every premium dollar on health care. Florida sought to delay implementing the rule until 2014.
“It’s no surprise that Florida politicians who are staunch opponents of reforming the health insurance industry tried to evade the only provision in the law that requires health insurance companies to make insurance more affordable by cutting bureaucratic waste, executive salaries and excessive profits. We applaud the administration for blocking this blatantly political attack on a key consumer protection in health reform, and protecting the estimated $140 million in rebates insurers will owe Florida consumers for overcharging them in 2011,” said Carmen Balber, Washington director for Consumer Watchdog.
In a letter opposing the waiver, Consumer Watchdog wrote that the state’s robustly competitive market, where insurance companies’ average MLR was just 3.4% below the 80% standard in 2010, was one of the most unjustifiable of all the applications HHS has received, concluding: “If Florida is granted a waiver, any state would qualify. You will have eliminated the high bar – serious market disruption – against which waivers should be measured.”
“Florida is using the MLR waiver process, intended to protect consumers if insurance availability is threatened, as a purely political tool,” said Consumer Watchdog research director Judy Dugan, who examined the state’s waiver application.
Florida Insurance Commissioner Kevin McCarty has led other efforts to undermine the medical loss ratio rule by excluding the pay of insurance brokers from administrative costs, which would provide a false accounting boost for insurance companies and eliminate the need for most insurance companies to become more efficient.
Consumer Watchdog submitted letters opposing two more pending waiver applications last week, in Kansas and Oklahoma.
See Consumer Watchdog’s letters opposing the Florida, Oklahoma and Kansas applications:
See all documents related to state waiver requests at:
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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org