KY-MLR Waiver Approved

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Kentucky’s Department of Insurance requested an adjustment of the 80 percent MLR standard to 65%, 70%, and 75% for 2011, 2012, and 2013, respectively.

Kentucky’s dominant issuer in the individual market, Anthem, has a market share of 83.5 percent, and intends to adjust its business model to meet the 80 percent standard. Of the three smaller issuers that are expected to owe rebates in 2011, two (Humana and Golden Rule) are significantly below an 80 percent MLR, based on 2010 data.  The third one (Time) operates at a loss and has indicated that it may consider leaving the market absent an adjustment to the MLR standard. The U.S. Department of Health and Human Services(HHS) found that some or all of these three issuers could be impacted by having to meet an 80% standard and could withdraw from the market.

All four of Kentucky’s individual market issuers expected to owe rebates in 2011 have MLRs above Kentucky’s requested 65 percent for 2011 and 70 percent for 2012. Time, the issuer that appears to be most at risk of withdrawal, had a 2010 MLR of almost 75 percent.

HHS determined to establish in Kentucky an MLR standard at 75% for the year 2011, with the 80 percent standard to apply in 2012 and each year thereafter.