Health and Human Services Secretary Kathleen Sebelius (Pic by US Mission Geneva, via Flickr)

A federal health agency yesterday denied two states’ requests for waivers of a provision in the health care reform law that requires a profit cap for health insurance companies. Florida is currently waiting for a decision on a similar waiver from the agency.

Via The Hill:

The Department of Health and Human Services said Indiana and Louisiana do not need an adjustment from the health law’s medical loss ratio. That provision requires insurers to spend at least 80 percent of premiums on medical care or offer rebates to their customers starting next year.

HHS can grant a temporary waiver if regulators determine that the requirement looks likely to destabilize a state’s individual health insurance market.

The agency determined that the health plans of Indiana and Louisiana can meet the threshold and that consumers will get better value without an adjustment, said Gary Cohen, acting director of oversight at the HHS Center for Consumer Information and Insurance Oversight.

The federal government announced two weeks ago that Florida would not hear a decision from Health and Human Services about its own waiver of the medical loss ratio (MLR) waiver until around Dec. 16, 30 days later than originally planned.

MLRs are used to set a standard on the amount of money collected by premiums that health insurance companies must spend on actual services, as well as a limit on how much goes to administration. In this case, insurance companies in Florida will be required by federal law to spend 80 percent of the money they collect on health services and 20 percent on administration.

Florida asked the federal government for permission to phase in the MLR over three years, as opposed to meeting the requirements as soon as they kick in.

Advocacy groups such as Florida CHAIN (the Community Health Action Information Network) have asked the U.S. Department of Health and Human Services “to reject a request by Florida’s Insurance Commissioner to grant insurance companies a reprieve from new Affordable Care Act requirements intended to ensure that consumers get value for the health insurance premiums they pay.”

GOP state legislators have longed disliked federal mandates requiring companies to spend a certain amount of their premiums on services. One legislator claimed the MLR was an example of the state “commandeering” Florida’s budget.

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