Small health insurers stop writing new coverage

Dallas Morning News reports that small insurers are having trouble meeting the 'medical loss ratio' requirement in the new National health legislation, which requires that 80% of their premiums be paid out for medical services. Some are discontinuing writing certain policies to their customers, since they do not believe they will be able to pay their employees, cover their administrative costs, etc. with just 20% of the premium money.

There are a couple of things interesting about this story.

1. Is this pressure on private providers really an unintended consequence of the new health legislation?
2. Insurers are walking away even before the policies interpreting the new law have been crafted. (What the businesses and individuals have to do in response to laws in the US depends on the policies that administrators write, based on the text of the law that is signed by the President) US DHHS has yet to write many of the policies based on the new law, but insurers are already seeing the writing on the wall.
   
   Surprisingly, the Secretary of DHHS Kathleen Sebelius is telling the insurers that they are making a mistake by walking away. "It is premature for insurers to make business decisions about participation in particular markets based on rules that have yet to be published...", said Sebelius. That is rather funny! So the businesses are staring in the face of new laws that go into effect on January 1; law that may make their continued actions illegal (with penalties ranging from fines to jail-time) and the person writing the policies is telling them, 'Don't worry about it! Surely whatever we write is going to be just fine!'
   Does she really want businesses to carry on through the rest of this year hoping that in the months between now and January the clear text of the law will be overturned by an administrative policy? Those who do business and provide people with valuable services cannot afford to sit by and run on hope, they have paychecks to meet and services to provide, and when one avenue is shut down for them (private health insurance), they they have to plan ahead to divert their resources into another area that is valuable for their customers.

The article about the particulars is worth reading. Good reporting by DMN!