Iowa requests waiver from medical loss ratio requirement

Iowa has asked federal regulators to give its individual market health plans until 2014 to comply with the healthcare reform law's medical loss ratio requirement. The law requires the plans to spend at least 80 percent of premiums on care starting next year.

"Iowa enjoys some of the lowest health insurance rates in the country," Iowa Insurance Commissioner Susan Voss writes in a letter sent Tuesday to Health and Human Services Secretary Kathleen Sebelius. "And our market provides for not only one very large health insurance carrier, but several small insurance carriers as well in the individual market. Already we are seeing several of our carriers with small numbers of insureds in the individual market announce their intent to cease business in our state.  This will impact the choices available to Iowa consumers."

Smaller carriers, Voss adds, "will not meet the initial 80% medical loss ratio factor in 2011.  They will need a phase-in period.  Without such a waiver provision, I believe the federal standard will disrupt our individual health insurance market. This in turn will negatively impact many Iowans who have enjoyed their coverage benefits through these smaller carriers."

Maine asked for a waiver from the medical loss ratio requirement in July.

Several other states are believed to be considering a similar request.