McCarty Discusses Health Care, MLR in Washington

Florida Insurance Commissioner Kevin McCarty and 34 other state insurance commissioners met privately with HHS Secretary Kathleen Sebelius today in Washington, D.C., to discuss the states’ role in implementing federal health-care reform. The meeting, held the day before the six-month anniversary of passage of the reform bill, also featured an appearance by President Barack Obama. Following the meeting, the National Association of Insurance Commissioners (NAIC) coordinated a media availability with McCarty and West Virginia Insurance Commissioner Jane L. Cline, NAIC president; Iowa Insurance Commissioner Susan E. Voss, NAIC president-elect; Kansas Insurance Commissioner Sandy Praeger, NAIC chair of the health insurance and managed care committee; and NAIC CEO Therese Vaughan. McCarty is the organization’s vice president. Florida Underwriter participated by telephone. In a statement prior to the meeting, McCarty’s office said that one of his major concerns in the health-care reform bill was defining Medical Loss Ratios (MLR) by January 2011. MLR is aimed at determining how much of the carrier’s premium will be directed toward payment of health-care claims versus administrative costs. Under the new federal Patient Protection and Affordable Care Act, insurers will have to spend 80 percent of the premiums they collect on health care and the remaining 20 on administrative costs. For larger carriers, the split will be 85/15 percent. McCarty has been proactive on the issue. His office held a public hearing in Orlando last May to gather information on MLR and its potential impact on the Florida marketplace. McCarty also has partnered with other state regulators in crafting a resolution supporting the role of insurance agents, something regulators fear will not be included in the equation as a result of new MLR requirements. The commissioners said that in today’s meeting they expressed specific concerns about MLR to the Secretary. At the press conference, McCarty said, “We have to recognize that we can’t put this all in place immediately. They [HHS and the administration] don’t like the word ‘phase-in’.” McCarty and his fellow commissioners appeared hopeful that further discussions would result in “the best recommendation possible” for implementation. Commissioner Voss said she “got a sense they were taking notes; that they will get back to us with information, and we will have continued open discussion.” As part of that discussion, HHS is interested in Florida’s plan. “Friday (September 24) we are having a public meeting in Florida to produce a case to present to the Secretary detailing our concerns about MLR’s disruption to the marketplace,” McCarty said. “The Secretary said she would like some concrete examples about loss ratios, companies’ loss of profits, hardship. We will bring that information back to her to make our best case about phasing in the MLR. I have spoken with a number of companies that have expressed their concerns. We have a robust competitive market in Florida, and we could lose some of those players. “I think that there is a paradox in passage of this [the MLR],” he continued. “Not everyone, by virtue of a phase-in period, is going to be successful. Some may have to adjust their business plan.” At the Sept. 24 hearing, McCarty will be asking companies for their action plans and what full implementation of MLR will mean to their companies. “We will be sending that information to the Secretary within about a month of our public hearing,” he said. Asking for waivers on MLR is an option being considered by some states, although panel members were not able to give an estimate on how many states might make that move. Kids Left Out The decision by several large insurers to stop selling child-only policies as early as Thursday also generated considerable discussion. Anthem Blue Cross, Aetna Inc., and other insurers recently announced that they will halt new child-only policies in Florida and several other states when provisions of the new law take effect September 23. UnitedHealthCare also reportedly will suspend its child-only policies, but has not yet said which states will be affected. Insurers cited the requirement that insurers cover children under age 19 regardless of their health histories and preexisting conditions as the main reason for these pull-outs.

Child-only policies have increased as employers have cut back on family coverage, and covered lives in these plans now number in the hundreds of thousands nationally.

McCarty said he was “not aware of anyone who is going to continue writing them” in Florida. That is bad news for Florida’s children, as McCarty further noted, “Some of them are eligible for [the state-sponsored] KidCare health plan.