Medical Loss Ratio Regulation Under the Affordable Care Act

2012 ◽  
Author(s):  
Scott E. Harrington
Keyword(s):  
Affordable Care Act ◽  
Loss Ratio ◽  
The Affordable Care Act ◽  
Medical Loss Ratio

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.

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)

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.

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