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States Tighten Rules on Insurance Industry Spending

State regulators decided that insurers must now spend more money on consumers.

Here’s a nice roundup from Kaiser Health News on negotiations between state regulators, insurers and consumer groups about rules governing exactly how much the insurance industry is supposed to spend on medical-related items vs. administrative costs (like marketing.)

Here’s what Politico had to say:

Some cost items, such as doctor’s bills, were clearly identified from the outset as medical spending. Insurers’ advertising and overhead were quickly put in the administrative category. But many other items, such as nurses’ hotlines, some federal taxes, insurance agents’ commissions and programs to improve care coordination, fell into a grey area and were subject to hours of debate. Under the final regulation, insurers can categorize a number of health-spending activities as ‘quality improvements.’ Spending to reduce hospital re-admissions, improve patient safety, reduce medical errors and certain health information technology investments all made the final cut. But regulators counted other costs, such as programs to prevent fraud, as administrative costs despite some protest from the insurance industry.