Medical insurance providers are very concerned about the effect of the new health care legislation regarding loss ratios.
Loss ratios define how the cost of the medical insurance premium is divided between actual medical care and administrative costs. If adjusted too high in favor of medical care, insurance providers will incur greater losses as they cover more of the administrative costs.
Insurance companies and agents are also worried about the impact of the new laws on the mini-med policies or limited benefit plans.
The plans are a significant source of revenue for insurance providers, as millions are sold annually. Limited benefit plans are similar to insurance plans that specifically handle critical illness, where a person is insured against specific medical conditions.
The issue stems from the fact that, under the new healthcare laws, limited benefit insurance plans are not essential benefits, so they cannot be offered through state exchanges.
In most states, the usual mandates for medical plans do not apply to mini-med plans. Some insurance providers take advantage of this by selling only limited-benefit plans to companies with over 50 employees.
Since the end result of the new legislation is to offer the public medical insurance with no limits (i.e. annual, lifetime), most providers would be forced to discontinue mini-med insurance plans. Insurance companies and agents are currently working to come up with a way to deal with this issue, since it significantly affects their business.
Consumers should also be concerned, especially those who bought this kind of insurance plan. If no changes are made to current legislation, they stand to lose their coverage in or before 2014. The original intent was to phase out insurance plans that have coverage limits that are low.
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