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Oklahoma loses bid for insurance company relief under health care law

Obama administration rejects Oklahoma Insurance Commissioner's request to lower the ratio that some companies must spend on health care claims rather than overhead and profit
BY CHRIS CASTEEL Published: January 5, 2012

The Obama administration announced Wednesday that it has rejected Oklahoma's request to shield some health insurance companies from the requirement that they spend at least 80 percent of the money they collect in premiums on medical costs.

The decision by the Department of Health and Human Services could mean nearly $16 million in rebates this year to about 70,000 Oklahomans who purchased their own health care coverage.

The state Insurance Department requested three years of lower ratios, warning that implementing the 80 percent requirement might mean fewer options for coverage in the state.

Oklahoma Insurance Commissioner John D. Doak said Wednesday, “This decision could lead to a massive disruption of our insurance markets in Oklahoma.”

But the Health and Human Services Department said the decision “will ensure consumers receive a better value for their premium dollar.”

The requirement, known as the Medical Loss Ratio standard, was part of the health care bill signed by President Barack Obama in 2010.

Companies that sell policies in the individual and small-group markets must show that 80 percent of premium revenue went to health care expenses and quality improvement, with the other 20 percent allowed for overhead and profit. Companies in the large-group market have an 85 percent threshold.

Those that fall below the threshold must issue rebates to policyholders.

Oklahoma is one of several states that asked the Health and Human Services Department to grant lower ratios until 2014, when all companies must abide by the standards. Kansas' application was also denied Wednesday.

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