Consumer Watchdog and the Center for Media and Democracy have sent a letter to Secretary Kathleen Sebelius calling on her and the administration to investigate the recent dramatic decreases in medical loss ratios by major health care insurers in anticipation of health care reform implementation. The insurers, led by Cigna and its 2nd quarter 6.4% drop, seek to benefit in two primary ways: 1) by squeezing out as many profits as they can, similar to credit card companies raising rates before laws kick in limiting those rates and 2) keeping their MLRs as low as possible by shoving consumers into lower cost plans in a way they would not be able under the new regulatory regime.

The medical loss ratio is the percentage of premiums earned spent on consumers’ health care. Congress sought to set a floor for the MLR so that insurers could not continue their practice of denying their customers care at unreasonable levels. But as the insurers wait for the regulation to be implemented, they are raising premiums and lowering their MLRs without providing clear explanations for their actions. Consumer Watchdog is calling on HHS to investigate the matter and release the details to the public.

This development only emphasizes the importance of refusing the insurers the opportunity to include plainly administrative expenses into the category that includes health care quality improvements. By having a robust and concise definition of HQI–activities that credibly and scientifically improve health care–insurers will not be able to exercise such gimmicks to circumvent health care reform.