New MLR Study Concerns Jones

California Insurance Commissioner Dave Jones reiterated his desire to regulate health insurance premiums in the Golden State, citing a new Commonwealth Fund study that showed carriers offering individual coverage boosting their profits despite new rules on medical loss ratios.

The MLR rules, part of the Patient Protection and Affordable Care Act, capped administrative spending at 15% to 20% of each premium dollar, depending on the kind of policy. Enrollees were to receive a rebate for any overspending on administrative costs. Nationwide, insurers rebated $1.1 billion to about 12.8 million policyholders for exceeding the MLR caps in 2011, according to data from the U.S. Department of Health and Human Services. 

In California, 1.9 million policyholders received rebates totaling $73.9 million. 

According to the study, which the Washington-based Commonwealth Fund released earlier this week, insurers cut their administrative costs $14 per member per year in 2011. Meanwhile, their profits rose by $88 for each member.

"Some families and businesses received health insurance premium rebates this past summer because insurers failed to meet the medical loss ratio, but this study indicates that at the same time some insurers increased their profits,” Jones said. “I have long pushed for the authority to reject excessive health insurance rate increases and this study provides further evidence of why this change in the law is long overdue. Health insurers...continue to impose double-digit premium increases each year.”

Efforts to allow the Insurance Commissioner the ability to regulate health insurance premium increases have fallen short, both in the Legislature and among efforts to put an initiative before voters.

Jones said his agency was currently auditing of health insurer MLRs in California. to ensure carriers are adhering to the new regulations.