Monday, October 25, 2010

State Insurance Commissioners Vote to Approve More Stringent Rules

The National Association of Insurance Commissioners voted unanimously to endorse standards requiring that "80 percent of premium revenue be spent on medical care and 'activities that improve health care quality' for patients." This requirement was set in place by health reform legislation.

The standards set limits on what revenue spending is defined as improvements to health care quality, and what is considered to be compensation or administrative spending. The goal of the standards is to make insurance companies function more as providers of healthcare and less as for-profit companies.

Secretary of Health and Human Services Kathleen Sebelius is expected to take the recommended standards and propose them as a new regulation for insurance companies. Opponents of the recommendations argue that they will negatively disrupt the insurance industry by forcing companies out of business and reducing consumer choice.

Source: The New York Times