Navigation Links
Consumers benefitted nearly $1.5 billion from the ACA's medical loss ratio rule in 2011
Date:12/4/2012

New York, NY, December 5, 2012Consumers saw nearly $1.5 billion in insurer rebates and overhead cost savings in 2011, due to the Affordable Care Act's medical loss ratio provision requiring health insurers to spend at least 80 percent of premium dollars on health care or quality improvement activities or pay a rebate to their customers, according to a new Commonwealth Fund report. Consumers with individual policies saw substantially reduced premiums when insurers reduced both administrative costs and profits to meet the new standards. While insurers in the small- and large-group markets achieved lower administrative costs, not all of these savings were passed on to employers and consumers, as many insurers increased profits in these markets.

"The medical loss ratio requirements are intended to give insurers an incentive to be more efficient and use most of their premium dollars for patient care," said Sara Collins, Commonwealth Fund Vice President for Affordable Health Insurance. "This report is encouraging, as it demonstrates that these new rules are improving value for people buying health insurance on their own, which has traditionally been very challenging. However, it will be crucial to monitor insurers' responses to this regulation over time to ensure that all purchasers and consumers benefit from the savings the law is designed to encourage."

The new report, Insurers' Responses to Regulation of Medical Loss Ratios, by Michael McCue of Virginia Commonwealth University and Mark Hall of Wake Forest University, looks at how insurers selling policies for individuals, small-employer groups (up to 100 workers), and large-employer groups (more than 50 or 100 workers, depending on the state) in every state reacted to the Affordable Care Act's medical loss ratio requirement between 2010, the year just before the new rule took effect, and 2011, the first year the rule was in place. The authors find that in the individual insurance market, improvements were widespread: 39 states saw administrative costs drop, 37 states saw medical loss ratios improve, and 34 states saw reductions in operating profits. Some states stood out for significant improvements. In New Mexico, Missouri, West Virginia, Texas, and South Carolina, medical loss ratios improved 10 percentage points or more, while administrative costs dropped $99 or more per member in Delaware, Ohio, Louisiana, South Carolina, and New York.

However, the report finds that in small- and large-group markets, medical loss ratios were largely unchanged, and while spending on administrative costs dropped, profits increased. For example, in the small-group market, administrative costs were reduced by $190 million, profits increased by $226 million, and the medical loss ratio remained at 83 percent, unchanged from 2010. In the large-group market, insurers reduced administrative costs by $785 million, increased profits by $959 million, and kept their medical loss ratio at 89 percent, also unchanged from 2010.

The authors note that while insurers in the individual market have a less stringent medical loss ratio requirement80 percent, as opposed to 85 percent in the large-group markettheir traditionally higher overhead costs and lower medical loss ratios mean they have to work harder to reach the new standard. As a result, these insurers lowered both administrative costs and profit margins, therefore reducing growth in premiums.

Conversely, insurers in the small- and large-group markets generally already have medical loss ratios in the range of the required 85 percent, so while they reduced administrative costs, they had the option of turning those cost savings into profits instead of passing them along to consumers. In light of rising profits and falling administrative costs, the authors suggest it is possible insurers took profit increases in the small- and large-group markets to offset the reduced profits in the individual market. And because many insurers sell policies in all three markets, any reduction in administrative costs could have been spread across all of a given insurer's lines of business.


'/>"/>

Contact: Mary Mahon
mm@cmwf.org
212-606-3853
Commonwealth Fund
Source:Eurekalert

Related medicine news :

1. Leveraging bacteria in drinking water to benefit consumers
2. NYC Ban on Super-Sized Sodas Would Cut Consumers Calories: Study
3. IntelliQuote Works to Educate Consumers about the Importance of Life Insurance Protection and to Make Coverage More Readily Available
4. Predrinking Nearly Doubles Booze Consumption: Study
5. Nearly half of kidney recipients in live donor transplant chains are minorities
6. Nearly $50 million in research funding awarded by NSF
7. Pain Reported by Nearly Half With Type 2 Diabetes
8. Clemson researcher awarded nearly $245,000 to study automation trust and dependence
9. GW School of Nursing receives nearly $1 million grant to diversify nursing workforce
10. Scripps Florida scientists awarded nearly $1.5 million to develop new approaches to treat cancer
11. Einstein receives nearly $5 million to study how Ebola causes infection
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:6/27/2016)... ... June 27, 2016 , ... ... health professionals, announced today its affiliation with Tennessee Counseling Association. This ... the network of the Tennessee Counseling Association, adding exclusive benefits and promotional offers. ...
(Date:6/27/2016)... ... June 27, 2016 , ... TopConsumerReviews.com recently awarded their highest five-star rating to ... of individuals in the United States and Canada wear eyeglasses. Once considered to be ... vision and make a fashion statement. Even celebrities use glasses as a way of ...
(Date:6/26/2016)... (PRWEB) , ... June 26, 2016 , ... Pixel Film ... Pro X. , "Film editors can give their videos a whole new perspective by ... Austin - CEO of Pixel Film Studios. , ProSlice Levels contains over 30 ...
(Date:6/26/2016)... ... June 26, 2016 , ... ... have been diagnosed with endometriosis. These women need a treatment plan to not ... comprehensive approach that can help for preservation of fertility and ultimately achieving a ...
(Date:6/25/2016)... ... , ... The temporary closing of Bruton Memorial Library on June 21 due to a possible ... often overlooked aspect of head lice: the parasite’s ability to live away from a human ... but a necessary one in the event that lice have simply gotten out of control. ...
Breaking Medicine News(10 mins):
(Date:6/24/2016)... , June 24, 2016 According ... by Type (Standard Pen Needles, Safety Pen Needles), Needle ... GLP-1, Growth Hormone), Mode of Purchase (Retail, Non-Retail) - ... This report studies the market for the forecast period ... reach USD 2.81 Billion by 2021 from USD 1.65 ...
(Date:6/24/2016)... Belgium , June 24, 2016 ... the appointment of Dr. Edward Futcher ... Non-Executive Director, effective June 23, 2016.Dr. Futcher was ... Nominations and Governance Committees.  As a non-executive member ... independent expertise and strategic counsel to VolitionRx in ...
(Date:6/23/2016)... 2016  MedSource announced today that it has ... solution of choice.  This latest decision demonstrates MedSource,s ... their clients by offering a state-of-the-art electronic data ... nowEDC as the EDC platform of choice in ... "nowEDC has long been a preferred EDC platform ...
Breaking Medicine Technology: