The federal government reject request to exempt health insurers

MADISON (AP) - The federal government has rejected Wisconsin's request to phase in a requirement that health insurers spent 80 cents of every dollar in premiums on medical care, one of the provisions of the Obama administration's health care reform.

Gov. Scott Walker's administration wanted to implement the change over three years for health insurance sold to individuals and families. It had also proposed that health insurers be required to spend a minimum of 71 percent on medical claims in 2011 and 74 percent this year.

The state insurance commissioner contended that companies might be forced to leave the Wisconsin market if the so-called 80-20 rule were immediately implemented.

But the U.S. Department of Health and Human Services said the state failed to provide data to support that contention, according to a Milwaukee Journal Sentinel report (http://bit.ly/A9KqzD ). The agency said 12 of the 15 insurance companies that sell individual insurance in the state are already at or near the 80 percent spending mark, and two of the other three companies are expected to meet the requirement for 2011.

About 180,000 people in the state are covered by health insurance sold directly to families and individuals.

A number of consumer advocates opposed the Walker administration's request. One group, Consumers Union, noted that by one measure Wisconsin has the most competitive market for individual insurance in the U.S.

ABC for Health, a public-interest law firm based in Madison, called the Obama administration's decision "a win for Wisconsin consumers." Group spokesman Bobby Peterson said the state's proposal would have protected companies that provide the least value.

In a statement, state Insurance Commissioner Ted Nickel called the decision "puzzling" and said that four health insurers have already exited the Wisconsin market.

The four companies combined to have less than 3 percent of the market for individual insurance in Wisconsin, according to the federal Center for Consumer Information and Insurance Oversight.

In its request for a waiver, the state had said 11 rural counties in three regions were "highly concentrated," and contended that the loss of an insurance company in one of those markets would hurt consumers.

But the Center for Consumer Information and Insurance Oversight challenged that. Its analysis found that six of the state's largest health insurance companies competed in the two regional markets for which the state provided information and that those companies spend at or near 80 percent of premiums on medical claims.

Federal officials have rejected exemptions for 10 states, granted modified adjustments to six states and approved one request for a waiver.