Illinois task force recommends reining in health insurers

The Associated Press reports: ” A task force appointed by Illinois Gov. Pat Quinn wants a state law forcing insurers to spend 80 to 85 cents of every premium dollar on providing health care, or pay rebates to customers.

In its initial recommendations released Thursday, the Health Care Reform Implementation Council also recommends legislation giving state regulators the authority to approve or deny health insurance rate increases.
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The task force report shows Illinois is proceeding with implementing the nation’s new health care law, the Affordable Care Act, just days after a federal judge in Florida found it unconstitutional.

The national law, enacted by President Barack Obama last March, likely is headed to the U.S. Supreme Court. Meanwhile, states are rolling out portions of the law.

The requirement on insurers’ spending on health care, called a “medical loss ratio,” is part of the federal legislation. The intent is to make sure consumers aren’t paying excessive administrative costs.

Illinois Department of Insurance Director Michael McRaith said Illinois insurers, all for-profit companies, now have much lower medical loss ratios: from the low 50s to high 70s. That means they spend somewhere between 50 cents and 70 cents of each premium dollar on medical care or efforts to improve health care quality.

The medical loss ratio is an indicator of value, McRaith said. “Are insurers using the consumers’ hard-earned premium dollars to provide health and improve the quality of health?” he asked. “Or are (the dollars) going somewhere that has nothing to do with the health care of policyholder?” McRaith was a member of the task force making recommendations to Quinn.

The insurance industry has said the spending ratio requirement would reduce competition and consumers’ access to health plans. The federal law requires minimum medical loss ratios of 85 percent in the large group market and 80 percent in the individual and small group market.

The new report also recommends Illinois run its own health insurance exchange, a Web-based tool where people and small businesses would be able to shop for health coverage. The exchanges, a key element of the national health care law, have been described as Travelocity for health insurance.

The council recommends the exchange be a quasi-governmental entity selling products to both individuals and small employers. At first, criteria would be set to ensure the quality of insurance products offered in the exchange, the council envisioned. Later, the exchange could allow all health insurers that meet minimum federal requirements to take part, according to the recommendations.

The council held four public meetings around the state and received more than 100 comments before releasing its preliminary recommendations Thursday.

Another public hearing on the recommendations is planned for Monday in Chicago. Following that, the council will give a full report to Quinn and begin working on the measures he recommends.

“These first round recommendations will be offered for review and comment by the public and other stakeholders, and will be further refined before final recommendations are presented to the governor,” said Michael Gelder, Quinn’s senior health policy adviser and chairman of the council.”