California Commissioner Wins Approval for MLR Rule

By Trevor Thomas

January 24, 2011 at 07:00 PM

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The California Office of Administrative Law is letting California Insurance Commissioner Dave Jones apply an 80% minimum medical loss ratio (MLR) requirement to the individual health insurance market.

California Insurance Commissioner Dave Jones says the state's Office of Administrative Law (OAL) has California medical loss ratio rule approved an emergency regulation authorizing him to impose an 80% medical loss ratio (MLR) in the individual health care insurance market.

The OAL ruling gives Jones legal authority to enforce the 80% MLR standard in California, even if Congress prevents the U.S. Department of Health and Human Services from putting that ratio into effect, Jones says.

"I will be watching very closely to make sure health insurers comply," Jones says in a statement.

An MLR is an indicator of how much an insurer is spending on claims.

The minimum MLR section of the Affordable Care Act, the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA), now requires non-grandfathered health insurers to spend 85% of large group premium revenue and 80% of individual and small group premium revenue on health care or quality improvement efforts.

Republicans are trying to repeal PPACA or block implementation of it, but, if the MLR provisions take effect as written, insurers that fail to meet the MLR goals this year will have to send rebates to customers in 2012.

Representatives from California insurers and insurance groups were not immediately available to talk about the possibility of a court challenge to the California MLR regulation. In the past, carriers have engaged in long legal and legislative battles to keep proposed health system changes from taking effect in California.

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