Roy Ramthun on the New MLR Rules
The final medical loss ratio (MLR) regulations will likely create a vacuum for affordable coverage that cannot be filled by Bronze plans under the state insurance exchanges. If the “essential benefits” and “actuarial value” requirements are equally as discriminatory, there will be no affordable options available and the cost of subsidies will skyrocket. As a result, millions of Americans that have policies today that could have qualified as Bronze plans will be forced to change their coverage or drop coverage because they can no longer afford it….
In the short-term, this could limit future growth of HSAs in the fully-insured markets (individual, small group, large group) … Insurance companies (especially the current market leaders) may be encouraged to sell more expensive plan designs with more first-dollar coverage (e.g., HMOs and traditional PPOs) because it will be easier to meet the MLR requirements.
Such are the potential effects that can only be identified after due diligence and research. Unfortunately, that stage seems to get abbreviated when you’re in a hurry to shove legislation through Congress.
The medical loss ratio (MLR) regulations will inhibit low-cost, high-deductible plans. By definition, comprehensive health plans function as a form of pre-paid medical care so a significant portion of the premium dollars are expected to be used for medical care. By contrast, low-cost, high-deductible health plans are pure insurance. Most people covered by a high-deductible health plan will never file a claim against their insurer. This fact makes it hard to meet the MLR regulations. People covered by high-deductible health plans are purchasing a financial service (the transfer of risk) and — for the most part — getting what they paid for.