Impact Of Medical Loss Regulation On The Financial Performance Of Health Insurers

    Authors

    M. McCue; M. Hall;X. L. Liu

    Comments

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    Abbreviated Journal Title

    Health Aff.

    Keywords

    LOSS RATIO; Health Care Sciences & Services; Health Policy & Services

    Abstract

    The Affordable Care Act's regulation of medical loss ratios requires health insurers to use at least 80-85 percent of the premiums they collect for direct medical expenses (care delivery) or for efforts to improve the quality of care. To gauge this rule's effect on insurers' financial performance, we measured changes between 2010 and 2011 in key financial ratios reflecting insurers' operating profits, administrative costs, and medical claims. We found that the largest changes occurred in the individual market, where for-profit insurers reduced their median administrative cost ratio and operating margin by more than two percentage points each, resulting in a seven-percentage-point increase in their median medical loss ratio. Financial ratios changed much less for insurers in the small-and large-group markets.

    Journal Title

    Health Affairs

    Volume

    32

    Issue/Number

    9

    Publication Date

    1-1-2013

    Document Type

    Article

    Language

    English

    First Page

    1546

    Last Page

    1551

    WOS Identifier

    WOS:000324681500006

    ISSN

    0278-2715

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