Will ObamaCare's Rules Put Some Health Insurers Out of Businesses?


This week, the National Association of Insurance Commissioners is meeting in Orlando. One item on their agenda: making a recommendation about how health insurance regulators should calculate the mandatory medical loss ratios in the new health care law. As CNN notes, the insurance industry is "on edge," with many plans worried that the new rules will force a shut down:

Industry experts say more insurers will drop health care coverage or go out of business if they are forced to meet a Jan. 1 deadline that requires them to boost the money devoted to providing care.

The Obama administration is awaiting the recommendation of the National Association of Insurance Commissioners, meeting in Orlando this week, for how and when to implement key changes to the "Medical Loss Ratio" rule.
Under health reform, beginning 2011, insurance companies will have to spend 80% to 85% of the premiums they collect on care instead of toward their own profits and overhead costs.

Prior to reform, requirements varied from state to state. In some cases, insurers didn't have to meet any minimum requirements.

A few months ago, the Congressional Budget Office warned that if the MLR requirements were set any higher, they would be "likely to substantially reduce flexibility in terms of the types, prices, and number of private sellers of health insurance." Looks like that may happen anyway.

More on medical loss ratios here, here, and here.