Louisiana Becomes 9th State to Request an Obamacare Waiver
IBD has just gotten word that Louisiana will become the ninth state to request a waiver from ObamaCare’s medical-loss-ratio regulations.
An MLR is the share of health premiums spent on medical costs. Under ObamaCare, insurers in the individual and small group market must have an 80% MLR, which means that 80% of premiums are spent on medical care, leaving 20% for things like salaries, advertising, fraud prevention and profits.
Violate that minimum and an insurer must rebate the difference to policyholders.
Many insurers have MLRs considerably lower than 80% , which means that they will have to rebate the difference. Of course, if they can’t afford to do that they will simply drop out of the market. Since states would rather not let that happen given that people losing their policies can turn into angry voters, they have begun requesting a reprieve from ObamaCare’s MLR regulations.
Louisiana makes similar arguments in its official waiver request:
A review of the language of the Affordable Care Act has raised concerns that there may be unintended yet harmful provisions included. These provisions will, if implemented as written, be disruptive and detrimental to Louisiana’s market. As currently proposed, implementing the 80% loss ratio in the individual market will act to decrease consumer choice, make coverage more expensive and less readily available, and work to drive valuable trained producers out of the market just when they are needed most.
Prior to Louisiana, eight states had requested waivers. One other state is in the process of putting together a waiver, five others are considering it, and three are keeping it as a future option.
The Obama administration recently granted Maine’s MLR waiver.