For Immediate Release: February 17, 2012

North Carolina Granted Adjustment to Medical Loss Ratio Standard

MLR adjustment helps preserve consumer choice, says Insurance Commissioner

RALEIGH -- Insurance Commissioner Wayne Goodwin today announced North Carolina has received approval from the U.S. Department of Health and Human Services for an adjustment to the applicable medical loss ratio standard for 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.

The federal government has adjusted the MLR standard in North Carolina to 75 percent in 2011 and 80 percent in 2012 and beyond, which will help preserve consumer choice by allowing time for insurers to transition to the new requirements.

The decision was a slight modification from the state's original request that the 80 percent MLR requirement be adjusted to 72 percent in 2011, 74 percent in 2012 and 76 percent in 2013.

"I am pleased that the federal government saw merit in our request and granted this adjustment. This decision underscores the value of state-based insurance regulation," Goodwin said. "The MLR adjustment helps North Carolina strike an important balance. It holds insurance companies accountable to higher standards and provides rebates for consumers, while preserving stability and consumer choice in our individual health insurance market."

The USDHHS letter of approval for the MLR adjustment, the request and its accompanying exhibits can be found at this health care reform website.