Obama administration postpones Georgia's request for health law waiver

The Department of Health and Human Services on Friday postponed for another month Georgia's request for a waiver of a key provision of the healthcare reform law.

Georgia has asked that health insurance plans operating in the state get a reprieve from the new rules requiring plans to spend at least 80 percent of premiums on medical care rather than administrative expenses and profits. A decision was expected this week, but HHS delayed its verdict until Nov. 9 or earlier. 

The medical loss ratio (MLR) provision requires insurers that don't meet the threshold to give customers rebates starting next year. The law allows states to apply for temporary waivers if the requirement looks likely to destabilize their individual health insurance market.

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Georgia has asked for a phased-in, adjusted ratio: 65 percent in 2011, 70 percent in 2012 and 75 percent in 2013.

The state does not currently have an MLR requirement in its individual market. According to preliminary data from the National Association of Insurance Commissioners, the state's individual market plans had an average MLR of 78.5 percent, lower than the national average of 80.9 percent.

The state's application says 28 percent of the state's individual plans are offered by insurers who have warned that "an exit from the Georgia individual market was possible" if they have to abide by the new rules. It also cautions that counting agent and broker commissions as administrative costs will make it harder for people to buy insurance because Georgians buy such policies through licensed agents.

"The natural consequence," the request states, "is that the insuring public in Georgia will find it far more difficult to find an agent to help them through the process of understanding and then purchasing an individual health policy."

To date, HHS has granted waivers to five states: Maine, New Hampshire, Kentucky, Nevada and Iowa. The department has denied them to Delaware and North Dakota.

The department is currently reviewing applications from eight other states: Florida, Louisiana, Kansas, Indiana, Michigan, Texas, Oklahoma and North Carolina. Public comments regarding Louisiana and Indiana's applications are due Saturday.

Guam had also applied for a waiver, but HHS determined the U.S. territory's insurers were so small they don't have to comply with the new rules.