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MLR Waiver Bill Would Shift Power to States

Margaret Dick Tocknell, for HealthLeaders Media, September 20, 2012

A waiver process permits individual states to apply for an MLR exception (an implementation delay or reduction) if meeting the 80/20 standard could destabilize the state's individual and small group market. Only 17 states took that step in 2011. CMS has granted waivers for seven states and denied waivers for 10.

Supporters of the waiver move contend that states know more about their markets than federal government analysts sitting in Washington, DC.

Critics contend that the shift to state approval for MLR waivers will create a patchwork system that will take money out of the pockets of consumers and give it to insurers. They point to states like Florida, whose waiver application drew criticism for its lack of substance. Its initial application and appeal were both denied by CMS.

In an e-mail exchange, Rep. Henry Waxman (D-CA) noted that "if the 10 states that could not substantiate their waiver requests had actually gotten a waiver, premiums would have been $360 million higher for 3.8 million consumers in those states."

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3 comments on "MLR Waiver Bill Would Shift Power to States"


E. Thomas (9/20/2012 at 11:53 AM)
Two points. First, if broker and agent fees and commissions are not included as administrative expenses (the 20% bucket), surely they cannot be considerd to be related to direct patient care and/or improving the quality of care (the 80% bucket). Second, if future legislation allows the sale of health insurance across state lines, then moving the MLR waiver decision to the state level could lead to insurers basing operations in MLR friendly states.

krockholt (9/20/2012 at 11:24 AM)
Makes a lot of sense to shift power back to the states, especially with such an unpopular act. I anticipate Romney winning the election and repealing anyway.

Donald R. First (9/20/2012 at 10:22 AM)
I haven't read the bill as it stands now, but I read an earlier version. Th e ability to give States the right to change the MLR is really silly and counter Productive. When did paying commissions to broker become a state Mandate. Take a dood solid look at the texas filing last year and you will see thay had no idea what plans were being marketed or what was realistic. The MLR calculation has plenty of fat. I would advise soe tweeks. I don't think groups of 250 or more should be limited by the MLR and I would excuse them, and I would use a lower MLR on HDHP plans.