Feds Reject Texas Request for Insurance Waiver

Texas wants to allow more spending on administrative costs

By Chris Tomlinson
|  Friday, Jan 27, 2012  |  Updated 12:52 PM CDT
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Feds Reject Texas Request for Insurance Waiver

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The federal government has rejected a request by Texas to be excluded from a new law that would limit how much health insurance companies can spend on overhead.

The law is part of recent changes in health care law that Texas officials say is unconstitutional. It requires health insurers to spend at least 80 percent of their revenue on health-related costs.

The Texas Department of Insurance had asked permission to allow Texas companies to spend more on administrative costs because it said the new rule could hurt the industry.

But the federal Department of Health and Human Services said Texas did not make its case. Health insurers who spend more than 20 percent on overhead and executive salaries will be required to give rebates to customers starting this year.

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