A request by Texas to be excluded from a new law that limits how much health insurance companies can spend on overhead has been rejected. The medical loss ratio requirement is part of the Affordable Care Act, the federal health care law passed in 2010 that Texas officials say is unconstitutional. The MLR requires health insurers to spend at least 80 percent of their revenue on providing health care or health improvement programs. Those that spend more than 20 percent on overhead and executive salaries will be required to give rebates to customers starting this year.
Federal officials at the Department of Health and Human Services said Texas did not prove that the state’s insurance market would be destabilized by the new law. As a result, Texas health insurers will likely pay out $476 million in rebates over the next three years, said Gary Cohen, acting director of oversight at the agency. Texas applied for a waiver in July that would allow Texas companies to gradually lower the spending requirement for health services to 71 percent in 2011, 74 percent in 2012 and 77 percent in 2013.
Seventeen states have applied for waivers; two are pending. Nine states, including Texas, have been denied. Six states have been granted a waiver, although in most cases the agency did not give the state as much as it wanted.
Topics Texas Profit Loss
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