Deriving Value from Mandated Information Systems Across Business Lines: Healthcare Insurance Industry's Reaction to Medical Loss Ratio

2021 ◽  
Author(s):  
Nirup M. Menon
Keyword(s):  
Information Systems ◽  
Loss Ratio ◽  
Healthcare Insurance ◽  
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)

scholarly journals Do Health Insurers Manage Their Medical Loss Ratios? At What Cost?

2021 ◽  
Vol 40 ◽  
Author(s):  
Elizabeth Plummer ◽  
William F. Wempe
Keyword(s):  
Health Plans ◽  
Loss Ratio ◽  
Level Data ◽  
Medical Loss Ratio ◽  
Health Insurers

We use plan-level data to examine a reporting incentive unique to health insurers—the federal Affordable Care Act’s (ACA’s) Medical Loss Ratio (MLR) provisions—which require that health plans spend a specified percentage of premiums on claims or else pay policyholder rebates. While there are no penalties for noncompliance with the MLR provisions, incentives for insurers to comply include avoiding political and reputation costs, reducing administrative burdens, and eliminating rebate payments. We find that health plans with pre-managed MLRs— i.e., the MLRs that would be reported without reporting discretion—below the required MLR overstate claims, thereby increasing their MLRs and reducing or eliminating rebate payments. Overall, results suggest that overstating claims reduced rebate payments by approximately $190 million to $325 million for 20112013; i.e., about 10–17% of total rebates actually paid. We also find that plans with pre-managed MLRs significantly greater than the minimum required MLR understate claims, thereby improving plan earnings while still complying with the MLR provisions. These understatements average between 14–34% of plans’ pre-tax earnings.

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.

Demystifying the Communication-Driven Usefulness Hypothesis

2019 ◽  
Vol 14 (4) ◽  
pp. 56-72 ◽  
Author(s):  
Makoto Nakayama ◽  
Steven Leon
Keyword(s):  
Information Systems ◽  
Mobile Applications ◽  
Information Quality ◽  
Ease Of Use ◽  
Perceived Usefulness ◽  
Perceived Ease Of Use ◽  
Systems Research ◽  
Information Systems Research ◽  
Healthcare Insurance

Healthcare insurance applications are increasingly vital to and have gained popularity with consumers. Previous information systems research featured perceived ease of use and perceived usefulness as key independent variables to explain behavioural intention impacting the use of information systems. In today's environment, however, many consumers already rely on websites and mobile applications as a key means of communication with healthcare insurance providers. Examining the data from 333 survey respondents, this study reports that perceived ease of use and perceived usefulness are strongly influenced by three communication content variables (information quality, interaction ease, and provider competence). Importantly, consumers may judge applications' ease of use based on the quality of communication contents. Once applications reach some maturity, the prominence of communication quality may drive their use more significantly than before.

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