Texas Congressional Democrats Urge Rejection of State Effort to Delay Vital Health Insurance Protections for Consumers

If insurers fail to comply with these standards, they must provide rebates to policyholders. If the State request is granted, <?xml:namespace prefix = st1>Texas families will lose more than $260 million in rebates anticipated to be paid out over the next three years. That is an average loss of $350 for each Texan covered by individual health insurance.

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"Texas Department of Insurance's unjustified request is nothing more than an early Christmas gift from Governor Perry's allies to insurance companies.Texas families deserve to get at least 80 cents of every premium dollar used for whatever health care they require. 20 cents of every dollar should be more than enough for overhead, profit, and filling the silk stockings with executive bonuses," said Rep. Doggett.

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[Their letter follows below]

December 21, 2011

The Honorable Kathleen Sebelius

<?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags">U.S. Department of Health and Human Services

200 Independence Avenue, S.W.

Washington,DC20201

Re: Texas Medical Loss Ratio Adjustment Request

Dear Secretary Sebelius:

We write to express our hope that you will deny Texas Department of Insurance's (DOI) request to delay full implementation of the new medical loss ratio (MLR) rules, and ensure that Texans are not denied the full benefits of the Affordable Care Act (ACA). Once again, some inTexas are more interested in protecting insurance companies than protecting consumers. Granting this request would be a tremendous mistake and increase the cost of health care to consumers.

One of the successes in our health insurance reform efforts is that starting in 2011, the ACA requires insurance companies to spend at least 80 percent of premium dollars on health care services and quality improvements, rather than on overhead, marketing, advertising, or bonuses. If insurers fail to comply with these standards, they must provide rebates to policyholders. This important provision of the ACA makes crucial strides toward holding insurance companies accountable for how they spend consumers' premium dollars and places downward pressure on insurance premiums.

Insurance companies do not want this accountability and the Texas DOI is intent on helping them evade it. If theTexas request is granted, hard workingTexas families will lose more than $260 million in rebates anticipated to be paid out over the next three years. That is an average loss of $350 for each Texan covered by individual health insurance.

Not only is this bad policy, butTexas has failed to satisfy the standard required to obtain an exemption. HHS can only grant a state an exemption from the MLR rules if the state demonstrates a reasonable likelihood that the requirement may destabilize the individual health insurance market in the state. However, there is no evidence that these consumer protections would result in a destabilized market inTexas, or that insurance providers would leave the state. In fact, the Texas Department of Insurance surveyed insurers and found that those covering more than 90% of theTexas market intend to stay inTexas regardless of whether this waiver is granted. Only two surveyed insurers indicated an intention to leave, and together they cover just 0.68% of the market.

As we move forward with implementation of the health insurance reform inTexas, retaining important protections for consumers is vital for the law to succeed. The MLR requirement is an important consumer protection to reduce premium cost and ensure the quality of care. If health insurance companies inTexas are allowed to maintain lower MLRs than are required under law,Texas consumers will pay a steep price.

Please deny this transparent request to put insurance company profits over patients.

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