The first domino now has fallen, but will the rest of them topple neatly in line? That is the question regarding state waivers from having to comply with new minimum medical loss ratio requirements in the health reform law following HHS's decision March 8 to grant Maine a three-year waiver in the individual market. Maine appeared to be an easy call, with only two private insurers in the market and one of them doing badly financially and selling mainly "catastrophic"-type limited coverage. Now the plot thickens with the next decisions to be made involving bigger states with more competition, including Kentucky, Nevada and New Hampshire, with Iowa and perhaps Florida to follow.
Where do you think HHS will draw the line in deciding whether to grant other states waivers from the MLR rule? The Obama administration, in its "bend but not break" mode, seems to want to show states it is being flexible on implementation of the reform law. But how flexible can it be and still apply what the law and it regard as necessary pressure to keep health insurers from doing whatever they want? It appears decisions will be based partly on the likelihood of competition disappearing and policyholders having no place to go until exchanges start and pre-existing condition limitations end in 2014 if carriers choose to exit. However, there are other factors to consider, including whether insurers are making poker-modeled bluffs about their intentions and ability to meet the MLR standards. Will HHS risk calling a bluff that may not be one?
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