Sen. Franken Praises HHS Regulations that Implement Provision Requiring Insurance Companies to Spend More Premium Dollars on Care
Today, Sen. Al Franken (D-Minn.) lauded new regulations issued by the U.S. Department of Health and Human Services (HHS) that will implement his "medical loss ratio" provision included in the health reform bill. The medical loss ratio provision requires insurance companies to spend a higher percentage of every premium dollar on health care instead of administrative costs, marketing campaigns, CEO salaries, or profits. The regulations follow recommendations from the National Association of Insurance Commissioners.
"Implementation of the medical loss ratio provision is a huge step toward ensuring consumers' premium dollars go to actual health care, not insurance company coffers," said Sen. Franken. "Many health insurers spend as little as 65 percent of your premiums on care, and the rest goes to enormous CEO salaries, advertising, or wasteful administrative costs. These regulations will hold health insurers accountable and make sure consumers get more value for their money."
The medical loss ratio provision was modeled after Sen. Franken's Fairness in Health Insurance Act and was inspired by Minnesota's non-profit health insurers, which lead the nation in keeping administrative costs low and which spend an average of 91 cents of every premium dollar on health services. The language in the health reform law sets an 85 percent standard on large group policies and 80 percent on small group and individual policies nationwide, allowing only the remaining portion to be spent on administrative costs, marketing campaigns, and profits.
