A new provision of the Patient Protection and Affordable Care Act known as medical loss ratio (MLR) provides greater value for consumers by requiring insurance companies to not only disclose how they spend their individual policyholders’ premium dollars but also dedicate at least 80 percent of those paid premium dollars to direct medical care and quality improvement programs for their customers.

Last spring, Georgia’s insurance commissioner, however, requested leniency on behalf of Georgia’s insurance companies to phase in this provision over three years rather than implement it immediately. This request was a tremendous disservice to the Georgians currently insured through individual policies.

Georgia Watch, along with Georgians for a Healthy Future, asked the US Department of Health and Human Services to deny Georgia’s request. We issued public comments to HHS and we authored an issue brief made available to the public. Luckily, our voice was heard, and a middle ground was struck. The Insurance Commissioner’s Office can still phase in the MLR rules, but at a much faster rate, which is a benefit to all Georgia policyholders with individual insurance. 

Starting in 2012, insurance companies operating in Georgia’s individual market must meet the 80 percent target or provide rebates to their customers. If the new requirement were implemented today, these insurance companies would have to rebate the nearly 350,000 Georgia customers enrolled in their health plans a total of about $42.6 million, or a little more than $100 per customer, on average.

The insurance commissioner’s office did not make an adequate case that the MLR adjustment should be granted. If insurance companies offering low-value, poor quality plans to consumers don’t meet the standard, they should be required to rebate their policyholders, and not receive a free pass. Read our comments here, and read the issue brief here.