Tag Archives: medical loss ratio

ACA rules force health insurers to increase spending on care delivery

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

The percent of premium dollars allocated to administrative costs and profit dropped in all markets since the introduction of the 80/20 rule.

The percent of premium dollars allocated to administrative costs and profit dropped in all markets since the introduction of the 80/20 rule. (Click to enlarge image.)

A new report on how health insurers are complying with the medical loss ratio rules shows insurers spent more on care delivery and less on profit and overhead in 2013 than they did in the previous two years.

The report, “Consumers Benefited From 80/20 Rule in 2013,” from the federal Department of Health and Human Services (HHS) shows that the percentage of consumers insured by companies that met or exceeded the requirements under the MLR rules has risen each year since the rules became effective in 2011. Tables accompanying the report offer some great story ideas for journalists who want to dig deeper into why insurers in their states would pay rebates to consumers rather than put those funds into care delivery.

Also called the 80/20 rules, the MLR regulations in the Affordable Care Act require insurers to spend a minimum of 80 percent of premium income on delivering care (and not on profit and overhead) in the small group and individual markets and at least 85 percent of premium income on care delivery in the large group market.

Under the MLR rules, if insurers fail to spend at least at these levels, they have to rebate the difference to consumers. Those rebates are due by Aug. 1.

“In the first three years of the MLR program, individual and employer plan enrollees received or will receive over $1.9 billion in refunds,” the HHS report said. Continue reading

GAO report on medical loss ratio finds insurers spend little on quality improvement

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

The U.S. Government Accountability Office generated some minor headlines last week when it reported on how much health insurers paid in rebates to policyholders in the first two years under the Affordable Care Act’s medical loss ratio (MLR) rules.

A close read of the report, “Private Health Insurance: Early Effects of Medical Loss Ratio Requirements and Rebates on Insurers and Enrollees,” reveals important details about how insurers spent the premium income they collected from consumers and businesses. The report shows insurers spend very little on quality improvement, that they report modest profit numbers and that MLR rules have not had caused them undue harm.

Continue reading