By Drew Armstrong
Wednesday, March 9, 2011; A04
Maine received a three-year waiver of federal rules, contained in the 2010 health-care law, that require insurers to spend at least 80 percent of premiums on patient care, the U.S. government said Tuesday.
Maine's waiver is the first that Washington has granted on the premium expenditure rules. Insurers in the state that sell policies to individuals will have to spend only 65 percent of premiums on patients, with the rest going toward profits and administrative costs. The exemption will last through 2013, U.S. regulators said in a letter to Maine officials.
The spending requirement "has a reasonable likelihood of destabilizing the Maine individual health insurance market," wrote Steve Larsen, deputy administrator of the Center for Consumer Information and Insurance Oversight. The office is part of the Department of Health and Human Services, which is implementing the health-care law.
In addition to establishing requirements on spending premiums toward patient care, the law created a process for states to get out of those requirements if they show the rules would destabilize their markets and could cause people to lose their coverage.
Kentucky, Nevada and New Hampshire also have applied for changes to the 80 percent rule. The federal government is reviewing the applications.
The federal government previously waived rules that would have created minimum annual coverage levels for some health plans.
Maine Insurance Commissioner Mila Kofman requested the exemption from the 80 percent rule after HealthMarkets threatened to stop selling individual policies in Maine.
The company is 77 percent-owned by funds run by the Blackstone Group and Goldman Sachs. Its subsidiary, Mega Life and Health Insurance, controls about 37 percent of the Maine market for individual insurance coverage, according to Larsen's letter.
- Bloomberg News