Before he leaves to become director of the Federal Insurance Office and deals with the implications of the Dodd Frank Act, Michael McRaith remains director of the Illinois Department of Insurance and has to contend with the enactment of another piece of landmark legislation passed last year, the Affordable Care Act.

It was in this capacity that McRaith briefed reporters this morning on the progress Illinois has made implementing the ACA, which was signed into law on March 23, 2010. McRaith noted that more than 1,000 uninsured Illinois residents with preexisting health conditions have received coverage through the Illinois Preexisting Condition Insurance Plan and that more than 100,000 Illinois seniors who reached the Medicare Part D “donut hole” have received a $250 rebate check.

The impact of the law on insurers was prominent in the briefing. McRaith noted the health insurance market in Illinois was in a state of dramatic transformation prior to passage of ACA, with fewer companies in the market and larger insurers gaining more market share.

“While in 2001 we had a very competitive market by most indicators, we now have a virtually non-competitive market for health insurance consumers,” he said. “The health insurance market in Illinois was becoming less functional and less competitive and the ACA will bring efficiencies. We know that there is some disruption and discomfort among insurers but we also know that consumers that are buying insurance today are better protected than they were a year ago.”

The primary source of this discomfort is likely the new rules regarding medical loss ratio (MLR). McRaith said he did not believe the new requirements were forcing insurers from the market. He added that the ACA allows states to request a waiver from the individual market 80% MLR requirement but said it wasn’t necessary. “Some of the smaller companies in the individual market were already beginning to exit the market because they could not compete with the larger insurers.  The larger insurers, which have 85% of the individual market in Illinois all meet or exceed the loss ratio or come very close.”

Another major component of health care reform, the establishment of health care exchanges to enable individuals to purchase health insurance on the open market was proceeding as scheduled, he said. “With respect to an exchange, Illinois must demonstrate sufficient progress to ensure continued funding for implementation of an exchange.”

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