Indiana consumers who buy their own health insurance will get a bigger bang for their buck in the next few years, thanks to a decision by the U.S. Department of Health and Human Services on Monday.

The federal agency rejected Indiana's bid for an exemption from federal health care overhaul rules that require insurers selling policies to individuals to essentially dedicate 80 percent of the premiums they collect to medical care. In other words, business costs and profits cannot total more than 20 percent of the premiums the insurers collect, or else they must pay rebates to policyholders the following year.

The Indiana Department of Insurance, arguing the 80 percent rule was discouraging insurers from selling individual policies, requested permission to allow the companies to devote just 65 percent of premiums to medical care this year, about 69 percent next year, 72 percent in 2013 and 76 percent in 2014.

Republican Gov. Mitch Daniels condemned the HHS decision.

"Once again, the Obama administration took a position in favor of higher health care costs and against personal freedom," Daniels said in a statement issued by his office.

The Insurance Department, in requesting the exemption, cited five carriers leaving the state's individual market since July 2010.

However, Gary Cohen, acting director of the Office of Oversight at HHS' Centers for Medicare and Medicaid Services, told reporters in a teleconference Monday that Aetna, Cigna, Pekin and two other companies got out of the market for reasons other than the 80 percent rule or that the departures would not make individual policies harder to get or more expensive in Indiana.

Logan Harrison, Indiana's deputy insurance commissioner for health compliance, disagreed.

"Anytime there's less choice in the marketplace, consumers are adversely affected," Harrison said in a telephone interview.

David Roos, a public health insurance advocate with Covering Kids and Families of Indiana, said insurance companies pressed the state for relief from the 80 percent rule during legislative hearings this past summer.

However, Roos said Indiana was among the first states to hold insurers "to a higher standard" when the Daniels administration, in designing the Healthy Indiana Plan medical savings account, required insurers to return not just 80 percent but 85 percent of premium dollars in medical care. Daniels is seeking federal approval to use the Healthy Indiana Plan to enroll newly eligible people in Medicaid beginning in 2014.

Indianapolis-based Anthem dominates Indiana's health insurance market for individuals with a 65 percent share, Insurance Department officials said this summer. The state's Medicaid actuary, Milliman Inc., has said Anthem and four other companies control 90 percent of the market.

However, consumer advocates say the exodus of Aetna and other companies might result in fewer choices and higher costs for consumers under health insurance exchanges to be established in 2014 under the health care overhaul. The exchanges will pool the resources of large groups of people to offer more affordable health insurance.

About 200,000 Indiana residents now have individual polices rather than employer-provided coverage. About 875,000 have no insurance at all.

Indiana and three other states have had requests for exemptions denied by HHS but several other states including Kentucky have won them. Seven other states have requests pending.