New Hampshire’s hospital industry and consumer groups are urging the Obama administration to reject the state’s request for temporary relief from a healthcare reform regulation. 

New Hampshire’s insurance commissioner is asking the Department of Health and Human Services to relax new requirements on how much insurers in the individual market must spend on actual healthcare. The new federal medical loss ratio (MLR) regulation, in effort to limit insurers' administrative spending and executive salaries, mandates that they spend at least 80 percent of premiums on medical care.

In January, New Hampshire Insurance Commissioner Roger Sevigny, noting that the state’s individual insurance market is dominated by a single carrier, asked HHS to lower the state’s MLR requirement to 70 percent through 2014.

“Absent a waiver, the application of the federal MLR to New Hampshire will disrupt the individual health insurance market,” Sevigny wrote to HHS Secretary Kathleen Sebelius. 

A pair of consumer organizations, NH Citizens Alliance and Working Families Win, urged HHS to reject the application.

“While working families are struggling financially, the individual and small-group insurance market disproportionately supports record insurance company profits even in a recession,” they wrote. 

Consumer Watchdog argued that Anthem, which controls almost three-quarters of the state’s individual market, can easily adjust to the new federal requirement without delay.

“Is Anthem so incapable of providing better health coverage to consumers that it will quit selling insurance or increase premiums to the point that consumers can no longer afford it? The application does not show that either scenario is likely,” the group wrote to Sebelius.

The New Hampshire Hospital Association said a lower MLR requirement would not effectively incentivize insurers to lower overhead, as the healthcare reform provision intended. If HHS approves the waiver, the hospital association asked for the department to approve a phased-in approach “to provide a more measured, but certain, movement to new standards under the health care reform law.”

Eight states have asked HHS for a temporary MLR waiver. The department has so far decided only on Maine’s application, which it approved earlier this month.