The Medical Loss Ratio (MLR) provision of the Affordable Care Act is "working the way we hoped it would," Sen. John D. Rockefeller IV, D-W. Va., said today at a contentious Senate hearing during which Republicans challenged aspects of the law.

"The minimum medical loss ratio is a very simple idea, but it appears to have had a powerful, and very positive, effect on the health insurance market," Rockefeller said at the hearing of the Commerce, Science & Transportation Committee he chairs.

"I understand that there are people in this country–maybe even here in this room–who find it hard to concede that anything good has or will come from the Affordable Care Act," Rockefeller said. "But I think it's pretty clear at this point that this piece of the law is."

The hearing featured an unusually sharp exchange at the end between Rockefeller and Sen. Ron Johnson, R-Wis. In his closing comments, Rockefeller contended some of the opposition to "Obamacare" was because of racism. Johnson took umbrage at that comment, saying it was offensive, and cited a litany of complaints about the law. Foremost, he said, it interfered with the free market, one which was able to save his child, who was born with a major heart defect.

He also said his constituents sent more than 150 complaints about higher premiums and deductibles for each comment about positive aspects of the law.

The MLR provision in the healthcare reform law requires individual and small-group insurance plans to commit 80% of premiums to healthcare, while large-group plans must achieve an 85% MLR.

The ACA also requires that each insurer must publicly disclose its MLR data, including premium income and expenditures on medical claims, broken down by individual, small-group, and large-group markets, as well as by individual states.

Sen. John Thune, R-S.D., ranking minority member of the committee, acknowledged that some consumers in his state have benefitted from the rebates provided by the law, but noted that those rebates come at a price.

According to Rockefeller, consumers and businesses have received $1.6 billion in rebate checks from their health-insurance companies because the insurers' coverage fell below the 80% and 85% MLR thresholds. This figure does not include 2013 rebates, which will be announced later in 2014, Rockefeller said.

But Thune contended that while the intent of the MLR is to help contain spending on health insurance, "which is a laudable goal," some experts believe that the MLR could actually raise the cost of premiums and narrow the competition in the marketplace.

Moreover, he said, he is "very concerned" that the MLR regulation put forth by Department of Health and Human Services "can undermine efforts by insurers to prevent fraud and abuse, including efforts to prevent the delivery of inappropriate or unnecessary services that may harm consumers."

Citing a report he ordered the committee staff to produce, Rockefeller said besides the rebates, millions more consumers have benefited from the changes health insurers have been making to avoid paying rebates.

For example, he said, reports issued by the non-partisan Commonwealth Fund have found that, in the first two years of the MLR requirements, insurers reduced overhead by a total of $1.75 billion–changes that ultimately reduce the cost of insurance to consumers and the government.

Moreover, Rockefeller said, the report found that prior to enactment of the healthcare law, health insurers could offer similar health plans in different states but with vastly different MLRs, and companies could make greater profits from plans offered in states that had limited or no MLR requirements.

"The ACA's new national minimum MLR requirements incentivize health insurers to provide policyholders appropriate value for their premium dollars–no matter what the consumer's state of residence," Rockefeller said.

He also said the new law required disclosure of more data by healthcare providers regarding insurance-plan performance.

"This is now helping academics, health-policy experts, financial analysts, and others understand how the market is working and where improvements are most necessary," Rockefeller said.

Thune countered that because the standards for the MLR program are left up to HHS, the provision effectively leaves the design of healthcare activities up to the government, rather than leaving the decision and choice to the consumer and state-insurance regulators.

In a theme also used by other Republican members of the committee, Thune said even if people are saving money on health-insurance premiums through the MLR, estimates from the nonpartisan Joint Committee on Taxation and the Congressional Budget Office project that tax increases from Obamacare are estimated to total $1 trillion over 10 years.

"Some of those costs will be passed on directly to consumers, including my constituents in South Dakota and many other Americans," he said.

Former Cigna executive and whistleblower Wendell Potter, who now works at the Center for Public Integrity, testified at the hearing that the "greatest benefit" of the MLR has been for individuals and families who are not able to get coverage through an employer.

He said according to the Kaiser Family Foundation, the average MLR in the individual market increased from 78% in 2010 to 83% in 2012.

"Researchers at the Foundation estimated that had it not been for the MLR requirements in the ACA, premiums in the individual market would have been $856 million higher in 2011 and $1.9 billion higher in 2012," Potter said.

Another benefit of the MLR is that insurers are now operating more cost–efficiently to stay in compliance with the law, and, as a result, many policyholders are paying lower premiums than they would have been charged otherwise, he said.

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Rockefeller Spars with Republicans on MLR, Other ACA Provisions During Hearing

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