scholarly journals IS THE MEDICAL LOSS RATIO A GOOD TARGET MEASURE FOR REGULATION IN THE INDIVIDUAL MARKET FOR HEALTH INSURANCE?

2013 ◽  
Vol 24 (1) ◽  
pp. 55-74 ◽  
Author(s):  
Pinar Karaca-Mandic ◽  
Jean M. Abraham ◽  
Kosali Simon
Keyword(s):  
Health Insurance ◽  
Loss Ratio ◽  
Good Target ◽  
Individual Market ◽  
The Individual ◽  
Medical Loss Ratio

scholarly journals Regulating Markups in US Health Insurance

2019 ◽  
Vol 11 (4) ◽  
pp. 71-104 ◽  
Author(s):  
Steve Cicala ◽  
Ethan M. J. Lieber ◽  
Victoria Marone
Keyword(s):  
Health Insurance ◽  
Affordable Care Act ◽  
Natural Experiment ◽  
Loss Ratio ◽  
Profit Margins ◽  
Medical Claims ◽  
Commercial Markets ◽  
Individual Market ◽  
The Individual ◽  
Medical Loss Ratio

A health insurer's Medical Loss Ratio (MLR) is the share of premiums spent on medical claims, or the inverse markup over average claims cost. The Affordable Care Act introduced minimum MLR provisions for all health insurance sold in fully insured commercial markets, thereby capping insurer profit margins, but not levels. While intended to reduce premiums, we show this rule creates incentives to increase costs. Using variation created by the rule's introduction as a natural experiment, we find medical claims rose nearly one-for-one with distance below the regulatory threshold: 7 percent in the individual market and 2 percent in the group market. Premiums were unaffected. (JEL G22, H51, I13, I18)

Sizing Up the Individual Market for Health Insurance

2013 ◽  
Vol 70 (4) ◽  
pp. 418-433 ◽  
Author(s):  
Jean M. Abraham ◽  
Pinar Karaca-Mandic ◽  
Michel Boudreaux
Keyword(s):  
Health Insurance ◽  
Individual Market ◽  
The Individual

Health Insurance and Labor Supply

2019 ◽  
Author(s):  
Gregory Colman ◽  
Dhaval Dave ◽  
Otto Lenhart
Keyword(s):  
Labor Market ◽  
Health Insurance ◽  
Labor Supply ◽  
Economies Of Scale ◽  
Low Cost ◽  
Market Effects ◽  
Job Lock ◽  
Individual Market ◽  
The Individual ◽  
The U.S

Health insurance depends on labor market activity more in the U.S. than in any other high-income country. A majority of the population are insured through an employer (known as employer-sponsored insurance or ESI), benefiting from the risk pooling and economies of scale available to group insurance plans. Some workers may therefore be reluctant to leave a job for fear of losing such low-cost insurance, a tendency known as “job lock,” or may switch jobs or work more hours merely to obtain it, known as “job push.” Others obtain insurance through government programs for which eligibility depends on income. They too may adapt their work effort to remain eligible for insurance. Those without access to ESI or who are too young or earn too much to qualify for public coverage (Medicare and Medicaid) can buy insurance only in the individual or nongroup market, where prices are high and variable. Most studies using data from before the passage of the Patient Protection and Affordable Care Act (ACA) in 2010 support the prediction that ESI reduced job mobility, labor-force participation, retirement, and self-employment prior to the ACA, but find little effect on the labor supply of public insurance. The ACA profoundly changed the health insurance market in the U.S., removing restrictions on obtaining insurance from new employers or on the individual market and expanding Medicaid eligibility to previously ineligible adults. Research on the ACA, however, has not found substantial labor supply effects. These results may reflect that the reforms to the individual market mainly affected those who were previously uninsured rather than workers with ESI, that the theoretical labor market effects of expansions in public coverage are ambiguous, and that the effect would be found only among the relatively small number on the fringes of eligibility.

Preemption and the MLR Provision of the Affordable Care Act

2014 ◽  
Vol 40 (2-3) ◽  
pp. 280-297
Author(s):  
Jeffrey Hoffmann
Keyword(s):  
United States ◽  
Health Insurance ◽  
Affordable Care Act ◽  
The United States ◽  
Insurance Companies ◽  
United States Department ◽  
Loss Ratio ◽  
Department Of Health ◽  
Outstanding Question ◽  
Medical Loss Ratio

This Note focuses on the medical loss ratio provision (“MLR Provision”) of the Patient Protection and Affordable Care Act (ACA). The MLR Provision states that health insurance companies must spend at least a certain percentage of their premium revenue on “activities that improve healthcare quality” (in other words, meet a minimum threshold medical loss ratio) and comply with reporting requirements determined by the Secretary of the United States Department of Health and Human Services (HHS). Because states have historically had authority over the regulation of health insurance, there is an outstanding question as to whether or not the MLR Provision has legal authority to preempt conflicting state MLR regulations.Part II of this Note outlines the major requirements in the MLR Provision and discusses the history of MLR regulation in the United States. Part III discusses the likelihood that the courts will soon resolve the question of preemption regarding the MLR Provision.

scholarly journals Same Game, Different Names: Cream-Skimming in the Post-ACA Individual Health Insurance Market

2020 ◽  
Vol 57 ◽  
pp. 004695802093376
Author(s):  
Daniel W. Sacks ◽  
Coleman Drake ◽  
Jean M. Abraham ◽  
Kosali Simon
Keyword(s):  
Health Insurance ◽  
Lower Cost ◽  
Insurance Market ◽  
State Regulations ◽  
Individual Health ◽  
Cream Skimming ◽  
Individual Market ◽  
Health Insurance Market ◽  
Market Coverage ◽  
The Individual

One of the Affordable Care Act’s (ACA) signature reforms was creating centralized Health Insurance Marketplaces to offer comprehensive coverage in the form of comprehensive insurance complying with the ACA’s coverage standards. Yet, even after the ACA’s implementation, millions of people were covered through noncompliant plans, primarily in the form of continued enrollment in “grandmothered” and “grandfathered” plans that predated ACA’s full implementation and were allowed under federal and state regulations. Newly proposed and enacted federal legislation may grow the noncompliant segment in future years, and the employment losses of 2020 may grow reliance on individual market coverage further. These factors make it important to understand how the noncompliant segment affects the compliant segment, including the Marketplaces. We show, first, that the noncompliant segment of the individual insurance market substantially outperformed the compliant segment, charging lower premiums but with vastly lower costs, suggesting that insurers have a strong incentive to enter the noncompliant segment. We show, next, that state’s decisions to allow grandmothered plans is associated with stronger financial performance of the noncompliant market, but weaker performance of the compliant segment, as noncompliant plans attract lower-cost enrollees. This finding indicates important linkages between the noncompliant and compliant segments and highlights the role state policy can play in the individual insurance market. Taken together, our results point to substantial cream-skimming, with noncompliant plans enrolling the healthiest enrollees, resulting in higher average claims cost in the compliant segment.

Key drivers of financial performance of insurers in the Affordable Care Act market exchange

2019 ◽  
Vol 33 (3) ◽  
pp. 130-135
Author(s):  
Michael McCue ◽  
Mark A Hall ◽  
Jennifer Palazzolo
Keyword(s):  
Financial Performance ◽  
Affordable Care Act ◽  
Market Exchange ◽  
Loss Ratio ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Medicaid Population ◽  
Individual Market ◽  
The Affordable Care Act ◽  
Medical Loss Ratio

While most publicly-traded insurers have experienced losses and exited the Affordable Care Act individual insurance market exchange, insurers specializing in Medicaid managed care have been profitable in this market. Accessing individual market data, this study compares the financial performance of 20 state insurers owned by two publicly-traded companies that historically focused on insuring Medicaid members compared to 40 insurers owned by other publicly-traded companies. Medicaid-focused insurers incurred a significantly lower medical loss ratio of 83.3% compared to the medical loss ratio of 93.7% of other publicly-traded insurers, and they earned a significantly higher profit margin of 4.6% compared to the operating loss of 6.5% incurred by other publicly-traded insurers. This superior financial performance of Medicaid-focused insurers could be due to one or a combination of: their care management experience with the Medicaid population, other cost reducing strategies such as provider contracting, or the enrollment of a healthier than average population.

The Purchase of Insurance across State Lines in the Individual Market

2009 ◽  
Vol 37 (S2) ◽  
pp. 150-164
Author(s):  
Stephanie Kanwit
Keyword(s):  
Health Insurance ◽  
Regulatory Authority ◽  
The State ◽  
Legal Issues ◽  
Regulatory Competition ◽  
Individual Health ◽  
Home State ◽  
Individual Market ◽  
Jurisdictional Competition ◽  
The Individual

This paper analyzes the legal issues associated with the leading and much-debated proposals that aim to revitalize state regulatory competition and allow individuals to purchase insurance across state lines (PASL). These proposals seek to reverse decades-old principles of state preeminence in the regulation of individual health insurance and instead create “jurisdictional competition” in the individual market by allowing an insurer to choose the state under whose law it wishes to be regulated, subject to certain consumer protections. Advocates say this type of jurisdictional competition would reform perceived problems in the individual market and lower the costs of individual health insurance by imposing the regulatory authority of only the insurer’s selected “home” state.

scholarly journals Adverse Selection and an Individual Mandate: When Theory Meets Practice

2015 ◽  
Vol 105 (3) ◽  
pp. 1030-1066 ◽  
Author(s):  
Martin B. Hackmann ◽  
Jonathan T. Kolstad ◽  
Amanda E. Kowalski
Keyword(s):  
Health Insurance ◽  
Adverse Selection ◽  
Welfare Gain ◽  
Health Reforms ◽  
Individual Mandate ◽  
Individual Market ◽  
Using Data ◽  
The Individual

We develop a model of selection that incorporates a key element of recent health reforms: an individual mandate. Using data from Massachusetts, we estimate the parameters of the model. In the individual market for health insurance, we find that premiums and average costs decreased significantly in response to the individual mandate. We find an annual welfare gain of 4.1 percent per person or $51.1 million annually in Massachusetts as a result of the reduction in adverse selection. We also find smaller post-reform markups. (JEL D82, G22, H75, I13)

scholarly journals States With Stronger Health Insurance Rate Review Authority Experienced Lower Premiums In The Individual Market In 2010–13

2015 ◽  
Vol 34 (8) ◽  
pp. 1358-1367 ◽  
Author(s):  
Pinar Karaca-Mandic ◽  
Brent D. Fulton ◽  
Ann Hollingshead ◽  
Richard M. Scheffler
Keyword(s):  
Health Insurance ◽  
Insurance Rate ◽  
Individual Market ◽  
The Individual
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