Health insurance issues: State regulators wary of health law, Medicare Advantage star system

News outlets report on changes to the individual health insurance market and Medicare Advantage plans under the new health law.

"State insurance officials say they fear that health insurance companies will cancel policies and leave the individual insurance market in some states because of a provision of the new health care law that requires insurers to spend more of each premium dollar for the benefit of consumers," The New York Times reports. "The National Association of Insurance Commissioners, representing state officials, says the federal government should take steps to prevent disruption of the market. Specifically, the group is drafting a recommendation that urges the federal government to allow a gradual three-year transition in states where the new requirement, which takes effect Jan. 1, could destabilize the market." The provision in the new law "will require many insurers to spend a larger share of their premium revenue — at least 80 percent — on medical care (and quality-improvement activities), rather than administration, expenses and profits" (Pear, 6/14).

Earlier, related KHN story: Insurance Regulators Wrestle With Definition Of 'Unreasonable' Rate Increases (Appleby, 5/17)

Meanwhile, the "star system" for rating Medicare Advantage plans "is about to become more significant," Kaiser Health News in collaboration with The Washington Post reports. "A few years ago, federal officials began rating these plans - using a scale of one to five stars - but seniors' advocates, policy analysts, insurers and some top Medicare officials agree the ratings are flawed. … Under the new health-care overhaul law, the ratings will be used for the first time to award bonuses potentially worth hundreds of millions of dollars to the best plans. If the bonuses had been in effect last year, the top-rated plans would have received a total of $1.3 billion, estimates Dr. Brian Biles, a health policy professor at George Washington University" (Jaffe, 6/15).

Kaiser Health News also has a chart of the percentage of beneficiaries enrolled in Medicare Advantage plan by star rating in each state.