Reason’s Pete Suderman, indispensable on tracking the train-wreck-in-motion that is the Affordable Care Act, has news on the latest waiver granted by the Obama administration — this one to Maine, where even the administration has to concede that the mandatory medical loss ratio provision of the bill poses a threat to the very existence of the state’s individual market:
. . . [T]he Patient Protection and Affordable Care Act’s mandatory medical loss ratio (MLR) provision, which requires health insurers to spend either 80 or 85 percent of their premium revenue on “clinical services” as determined by federal regulators, is a roundabout form of price control. So it wasn’t terribly shocking when the Congressional Budget Officewarned that particularly high MLR requirements would be “likely to substantially reduce flexibility in terms of the types, prices, and number of private sellers of health insurance.” It’s a pretty straightforward concept: When the government controls prices, private firms exit the market or offer fewer products.
Now it seems the federal government has finally caught on to the idea. The Department of Health and Human Services issued a waiver to the state of Maine exempting its individual health insurance market from from the 80-percent spending requirement. Why the special exemption? According to Steve Larsen, the Obama administration’s deputy administrator of the Center for Consumer Information and Insurance Oversight, the rule “has a reasonable likelihood of destabilizing the Maine individual health insurance market.”