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Despite higher unemployment and fewer people getting coverage at work, Aetna’s earnings were up last quarter by 42% over the same quarter last year. The company benefited from lower medical spending, allowing them to reserve more of consumers’ premiums for administration and profits. The proportion of premiums spent on medical care, the medical loss ratio, was down to 81.8% from 86.8% in the same quarter of last year. Under national health reform, insurers will have to spend at least 85% of premiums on medical care and quality improvement for large groups and 80% for small groups, effective next year. Spending over that amount must be refunded to policyholders. Several states have similar laws and policyholders in those states have received millions in refunds from insurers with low medical loss ratios. The laws are intended to keep premiums down and encourage health insurers to spend on health care rather than administration and profit. Standards for medical loss ratios under national health reform are being developed now. Under the law, the National Association of Insurance Commissioners (NAIC) will make recommendations to HHS on what to include as acceptable medical and quality expenses. Insurers, including Aetna, are aggressively lobbying NAIC to weaken the definition to include expenses such as claims processing, utilization review, and fraud detection. In a letter to NAIC Sen. Rockefeller (WV) states that the intent of the law was to hold health insurance companies accountable. Consumer and provider groups are advocating for a careful definition focused on health care and quality improvement. CT Insurance Commissioner Sullivan is on the NAIC committee which will make recommendations to HHS. In a recent meeting with advocates, he invited letters of comment.
Ellen Andrews