For Immediate Release: September 6, 2011

North Carolina Requests Adjustment to Medical Loss Ratio Standard

MLR adjustment would preserve consumer choice, says Insurance Commissioner

RALEIGH -- Insurance Commissioner Wayne Goodwin today announced North Carolina's request to U.S. Department of Health and Human Services Secretary Kathleen Sebelius to adjust the applicable medical loss ratio standard for the individual comprehensive health insurers in North Carolina.

The Patient Protection and Affordable Care Act requires insurance companies to spend at least 80 percent of premium dollars on medical care and health care quality improvement, rather than on administrative costs, starting in 2011. Upon request, the federal government may grant a state adjustments to the standard if it is determined that the 80 percent medical loss ratio requirement could destabilize the individual market in the state.

North Carolina has requested that the 80 percent MLR requirement be adjusted to 72 percent in 2011, 74 percent in 2012, and 76 percent in 2013. Comprehensive health insurers issuing policies to individuals would have to meet the 80 percent MLR standard in 2014.

Goodwin issued the following statement:

I believe it is in North Carolina's best interests to request an adjustment to the MLR requirement in order to safeguard consumer choice of health plans, while also holding insurance companies accountable to higher standards. The hope is to limit the potential for short-term disruption of the health insurance market in North Carolina prior to the full implementation of the Patient Protection and Affordable Care Act in 2014.

The decision to request an adjustment was made after consultation with insurers, agents and brokers, consumer advocates, physicians and Department of Insurance technical experts, including its actuaries. I am pleased that each state's insurance regulator is provided the opportunity to make such a request, as it demonstrates the importance of continued state-based regulation of insurance-something I have fully supported since taking office. State-based insurance regulation, as opposed to federal insurance regulation, much better preserves consumer protection, promotes insurance market stability and ensures carrier solvency.

The MLR adjustment request report and accompanying exhibits can be found here.