Medical Insurance Agents Express Concern Over MLR
Medical Insurance Agents Express Concern Over MLR
Medical insurance providers are very concerned about the effect of the new health care legislation regarding loss ratios.Loss ratios define how the cost of the medical insurance premium is divided between actual medical care and administrative costs. If adjusted too high in favor of medical care, insurance providers will incur greater losses as they cover more of the administrative costs.Insurance companies and agents are also worried about the impact of the new laws on the mini-med policies or limited benefit plans.The plans are a significant source of revenue for insurance providers, as millions are sold annually. Limited benefit plans are similar to insurance plans that specifically handle critical illness, where a person is insured against specific medical conditions.The issue stems from the fact that, under the new healthcare laws, limited benefit insurance plans are not essential benefits, so they cannot be offered through state exchanges.In most states, the usual mandates for medical plans do not apply to mini-med plans. Some insurance providers take advantage of this by selling only limited-benefit plans to companies with over 50 employees.Since the end result of the new legislation is to offer the public medical insurance with no limits (i.e. annual, lifetime), most providers would be forced to discontinue mini-med insurance plans. Insurance companies and agents are currently working to come up with a way to deal with this issue, since it significantly affects their business.Consumers should also be concerned, especially those who bought this kind of insurance plan. If no changes are made to current legislation, they stand to lose their coverage in or before 2014. The original intent was to phase out insurance plans that have coverage limits that are low.Unfortunately, there is no alternative in place for people who are already on mini-med plans. The government as well as the medical insurance industry is still looking for a solution.Employers who are currently offering this kind of benefit to its workers are also in a dilemma. They need to assess if they can sustain those benefits until 2014, when the exchanges are fully implemented, or if they will be dealing with more expenses when policies are renewed on January 11, 2011.Many policyholders and employers were not sure if they should renew their mini-med plans before September 23, which is when the no annual or lifetime limit condition for medical insurance took effect.The new healthcare laws also seek to change the current medical loss ratio. The problem is, if the change results in more administrative costs for insurance providers, this will negatively affect their business and even drive premium costs for the consumer higher.According to a major organization for health underwriters, clinical benefits (i.e. services, activities) offered to the consumer should be comprehensive.This means that, costs to the insurer should be fair and account for the various kinds of insurance products and services.Other insurance organizations, composed of brokers and agents agree with this statement.The statement was a response to the question of how to define MLR under the new healthcare legislation and how it can be included in federal regulations that will take effect by January.The new law also requires insurance providers to submit a report to the HHS, which is a yearly report on the MLR.Many activities related to health plans are negatively affected by the new MLR calculations. This is a major concern, since, even Congress has acknowledged that certain activities related to medical insurance are important in improving the quality of medical care and minimizing the cost for medical treatments.Health providers are saying that, if these health plan activities are adversely affected by the new MLR definition, the purpose of the new legislation is defeated. Consumers will be saddled with higher costs but without the corresponding increase in the quality of health care.Medical insurance providers are also requesting for legislators to consider standard accounting rules (i.e. NAIC) when redefining the MLR.This is one way to define the MLR, but the new health care legislation has a broader view. Under the new law, not only is the MLR redefined, but medical insurance providers are to submit a report showing the total revenue they get from premium payments and the percentage of that amount that is spent on clinical services, health care activities and other costs.Insurers and carriers are required by the new law to be transparent with regards to the cost allocation of revenue they get from premium payments. They have to make it known to the public the amount allocated to actual health benefits, administration and any other expenses. Now You Can Obtain Visitor Medical Insurance Authorization Online! 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