Obama Administration Should Halt Health Reform Waivers, Says Consumer Watchdog

Mar 29, 2011, 11:52 ET from Consumer Watchdog

WASHINGTON, March 29, 2011 /PRNewswire-USNewswire/ -- Consumer Watchdog told the Obama Administration that waivers of consumer protections in the health reform law should be the exception, not the rule, in a letter sent to the Department of Health and Human Services to oppose Anthem's attempt to evade medical spending rules in New Hampshire.

Comments on New Hampshire's application to waive the requirement that health insurers in the individual market spend 80% of consumers' premium dollars on health care instead of administration and profit were due March 24, and were made public today by HHS.

Consumer Watchdog's letter said, in part:

"It is not your job to preserve the status quo for companies as they operate in the market today. The standard for granting a state waiver should be whether consumers will be able to access insurance when the rules are implemented, not whether they will cause a shift in the market as more efficient insurers increase their business and more wasteful insurers clean up their act. The fact that some insurers will have to reduce administrative spending and profits to reach a minimum level of efficiency was the reason Congress enacted the medical loss ratio standard."

"The New Hampshire waiver application comes down to Anthem: Is Anthem so incapable of providing better health coverage to consumers that it will quit selling insurance or increase premiums to the point that consumers can no longer afford it?"

"How could Anthem be reducing administrative spending and profits to move closer to the required loss ratio? Has the company made any efforts to do so? It doesn't appear that these basic questions were asked."

"New Hampshire's proposed solution, to preserve the status quo by setting medical loss ratios at 70% for three years, raises another question. What is the incentive for Anthem to move closer to the 80% target if they are allowed to continue business as usual for the next three years?"

"We understand that under limited circumstances state waivers may be necessary to protect consumers from the worse fate of losing all access to insurance. However, New Hampshire's application has not provided evidence this would occur. "

"Granting a waiver in this case, where the only real argument for it is that Anthem currently does not meet the rules, could start an avalanche of medical spending waivers. The end result would be an insurance industry that need not reduce wasteful overhead or excess profits for the next three years. We urge you to deny New Hampshire's request for a waiver."

Download the full letter from Consumer Watchdog here: http://www.consumerwatchdog.org/resources/nhwaiver.pdf

Find New Hampshire's application and public comments at the HHS website: http://cciio.cms.gov/programs/marketreforms/mlr/mlr_newhampshire.html

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog