Michigan seeks delay for new health insurance rules

Michigan is asking the federal government to delay a requirement that health insurers devote more of the premiums they receive to medical treatment, an effort that could deny some customers millions of dollars in rebates.


Instead, that money would stay with the insurance companies for profits, marketing, salaries and other administrative costs.


State officials in Michigan, and other states that have requested the waiver, argue that the requirement that insurers spend at least 80 cents of every dollar of premiums on medical care could cause some insurers to leave the market. The requirement was part of the 2010 health care overhaul. The waiver applies only to people who buy insurance on their own, about 400,100 people, or 4 percent of the state's population.

The Obama administration says the new minimum spending rules, which also apply to plans bought through employers, will make the insurance market more transparent and make it easier for consumers to buy plans that provide better value for their money. As many as 9 million Americans could be eligible next year for rebates worth a combined $1.4 billion, the administration estimates. Average rebates for those who purchase plans on their own could total $164.


Michigan insurance companies could owe as much as $95 million in rebates based on their 2010 spending. Under the state's proposal, that would be reduced to $42 million.


"Absent the adjustment, we anticipate significant disruption in the individual health insurance marketplace," state Insurance Commissioner R. Kevin Clinton wrote in his waiver request to the U.S. Department of Health and Human Services.


That request was backed by GOP Reps. Dave Camp, chairman of the House Ways and Means Committee, and Fred Upton, chairman of the House Energy and Commerce Committee, who share jurisdiction over health care issues.


"While approving Michigan's application will not solve the fundamental flaws in the Democrats' health care law, on behalf of Michigan constituents, we believe it is important to voice our strong support for steps that can limit the damage inflicted on consumers as a result of this misguided law," the Michigan Republicans wrote in a letter to Health and Human Services Secretary Kathleen Sebelius.