Healthcare Reform: Maine Wins Waiver to Health Insurance Spending Requirement

A day after the Department of Health and Human Services granted more than a hundred waivers to health insurance minimum benefit requirements, the HHS has granted the State of Maine a waiver to another major healthcare reform health insurance requirement. The waiver gives the State of Maine a three-year exemption from the requirement which requires health insurers to spend at least 80 cents of each dollar in health insurance premiums on patient medical care. Health insurers in Maine will only be required to spend 65 cents of each dollar in health insurance premiums on patient medical care.

The spending requirement “has a reasonable likelihood of destabilizing the Maine individual health insurance market,” wrote Steve Larsen, deputy administrator of the Center for Consumer Information and Insurance Oversight. Maine Insurance Commissioner Mila Kofman requested the exemption from the 80 percent rule after HealthMarkets Inc. threatened to stop selling individual policies in Maine. The company is 77 percent-owned by funds run by Blackstone Group LP (BX) and Goldman Sachs Group Inc. (GS) Its subsidiary, MegaLife and Health Insurance Co., controls about 37 percent of the Maine market for individual insurance coverage, according to Larsen’s letter.

Maine is the first state to be granted an exemption from the health insurance premium spending requirement, but Kentucky, Nevada and New Hampshire have also applied for changes to the rule. The federal government is reviewing those applications.

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