Kentucky’s request to delay the federal health care law’s medical loss ratio (MLR) requirements for the individual health insurance market was denied by the federal government late last week, though the state did catch a slight break. The MLR dictates the amount of money insurance companies must spend on medical services versus administrative costs. From the Lexington Herald-Leader:
Kentucky had asked federal authorities to gradually increase the medical loss ratio to 65 percent in 2011, 70 percent in 2012, 75 percent in 2013 and 80 percent in 2014. The Department of Insurance said that Kentucky’s insurance market was small and there were concerns that requiring an 80 percent medical loss ratio would result in more insurance companies leaving the state. In 1994, the state overhauled its health insurance laws, resulting in 43 companies leaving the Kentucky market.
But in a letter to state officials, federal officials said that they believed that companies operating in Kentucky would be able to meet the 80 percent ratio by next year without substantial losses and disruptions to Kentucky markets. Kentucky insurers will be required to meet the 75 percent medical loss ratio this year and 80 percent the following year.