The medical loss ratio's mixed record
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • MedPAC likely to recommend CMS simplify alternative payment models
      Medicare physician claims down 19% in first half of 2020 from pre-pandemic expectations
      Florida governor faces growing charges of vaccine favoritism
      Insurance regulator to issue warning on virus-test billing
    • Florida governor faces growing charges of vaccine favoritism
      Insurance regulator to issue warning on virus-test billing
      Sutter Health posts sizable 2020 loss, announces sweeping review of finances
      Accidentally trashed, thawed or expired: Reports of COVID vaccine spoilage
    • Shareholder group calls out HCA for alleged excessive emergency department admissions
      Metrologo 600x400_i.jpg
      MetroHealth forms Center for Cancer Research
      The Check Up: Dr. Marc Boom
      The Check Up: Dr. Marc Boom of Houston Methodist
      Dr. Marc Boom
      Q&A: Houston Methodist CEO praises staff efforts to keep vaccine efforts going during ice storm
    • Solid sign-ups for Biden's new Obamacare coverage offer
      OU Health Physicians, Oklahoma Blues plan fail to reach new contract
      Blue Cross NC claims costs rise thanks to COVID
      BlueCrossBlueShieldSign-main_i_i_i.jpg
      Michigan Blues post lowest operating profits in four years amid COVID-19 pandemic
    • MedPAC likely to recommend CMS simplify alternative payment models
      Florida governor faces growing charges of vaccine favoritism
      States rapidly expanding vaccine access as supplies surge
      Becerra taking heat for support of abortion rights
    • Sutter Health posts sizable 2020 loss, announces sweeping review of finances
      UPMC's patient volumes stabilize, boosting 2020 profits
      Genomics firms taking advantage of SPACs trend to go public faster
      COVID-19 could dent hospital revenue by at least $53 billion in 2021, AHA says
    • Insurance regulator to issue warning on virus-test billing
      351532635.jpg
      Red-hot virtual care market propels New York City health startups to record year
      Teladoc reports $383.3M in fourth-quarter revenue, up 145%
      man and woman looking at ipad wearing face masks stock image
      Sponsored Content Provided By Surescripts
      Improvements to benefits data can enhance ePrescribing and the patient experience
    • Accidentally trashed, thawed or expired: Reports of COVID vaccine spoilage
      Coronavirus deranges the immune system in complex and deadly ways
      Majority of small businesses not requiring vaccines, tests
      Highmark Health partners with Verily subsidiary on chronic care issues
    • Francoise_Adan1_i.jpg
      Cleveland's UH creates position of chief whole health and well-being officer
      Alicia Wilson
      Q&A: Emerging leader Alicia Wilson on staying close to home
      Michael Jordan, Novant team up to address health equity
      Former Ascension CEO, the first to lead the health system, passes away
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
    • What's next for on-demand telehealth companies?
      A CalOptima PACE vaccination clinic.
      Will COVID-19 be the catalyst for creating a more sustainable healthcare system?
      A map of the U.S. with images of the coronavirus.
      The digital divide becomes a new social determinant of health
      Ascension’s St. Mary’s Hospital Surgery Center at Towne Centre and Allegheny Health Network’s Bethel Park surgery center
      Hospitals see opportunity, risk in ambulatory surgery centers
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • What's next for on-demand telehealth companies?
      Rising prescription copays drop adherence, spike mortality, research shows
      Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      Highmark Health inks six-year cloud, tech deal with Google
    • Hospitals' Medicare billing practices suggest upcoding, OIG says
      California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      Humana partners with in-home provider for 24/7 care
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
    • MedPAC likely to recommend CMS simplify alternative payment models
      Bundled payments reduce surgery costs by 10.7%
      Coordinated payment policies could speed transition to value, experts say
      CMMI's geographic direct contracting model needs an overhaul, experts say
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Dr. Alan Kaplan
      The risks, rewards of taking organizations 'where they haven’t gone before'
      Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
    • Dr. Stephen Markovich
      Making sure we're aligned along the path to achieving inclusion
      Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
    • Vaccinating children could be the key to ending the pandemic
      Mikelle Moore
      The promising future of rural healthcare, even amid the COVID-19 pandemic
      In-person visitation must be part of the national COVID-19 response
      We've lost so much to the pandemic, but we've also made gains that will endure
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Minorities in Healthcare
      • - Luminaries
      • - Top 25 Minority Leaders
      • - Minorities to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • podium march webinar logo lockup
      Sponsored Content Provided By Podium
      Webinar: Critical Touchpoints for Every Patient’s Journey — How Technology Plays an Important Role
      scp health logo lockup march 2021
      Sponsored Content Provided By SCP Health
      Webinar: COVID’s call to action — Reset for success in 2021
    • Women Leaders in Healthcare Conference
    • Social Determinants of Health Symposium
    • Healthcare Transformation Summit
    • Leadership Symposium
    • Virtual Briefings
      • - Hospital of the Future
      • - Mental Health
      • - Patient Safety & Quality
      • - Strategic Marketing
      • - Virtual Health
      • - Workplace of the Future
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Next Up Podcast: Educating patients on the COVID-19 vaccine with Tanya Andreadis
      Dr. Joseph Cacchione
      Next Up Podcast: Educating patients on the COVID-19 vaccine with Dr. Joseph Cacchione
      Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
    • Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways
      Beyond the Byline: How residents' stories shape our coverage of the vaccination rollout in nursing homes
      Beyond the Byline: Regulators aim to boost value push with fraud and abuse law updates
      An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
    • Outreach during COVID-19
      Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Dr. Marc Boom
      The Check Up: Dr. Marc Boom of Houston Methodist
      The Check Up: Dr. Imran Andrabi
      The Check Up: Dr. Imran Andrabi of ThedaCare
      The Check Up: Tanya Blackmon
      The Check Up: Tanya Blackmon of Novant Health
      The Check Up: Dr. Patrick Hwu
      The Check Up: Dr. Patrick Hwu of the Moffitt Cancer Center
    • ivana naeymi-rad one on one intelligent medical objects
      Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Insurance
The ACA after 10 years: Repair or replace?
March 14, 2020 01:00 AM

The medical loss ratio's mixed record

Shelby Livingston
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Dr. Richard Shinto

    “Everybody was managing medical costs to a degree, but if there were significant savings it really went to the health plans or providers. What the government was trying to do was drive those savings back into more benefits and better benefit design. I think they’ve done a good job of forcing that.”

    Dr. Richard Shinto
    CEO
    InnovaCare Health

    For all of its success in expanding health coverage to more than 20 million Americans, the Affordable Care Act has stumbled in a key area: affordability.

    Despite various provisions tucked into the law aimed at lowering costs, consumers continue to face high prices from both providers and insurers. And 10 years later, affordability is at the center of policy debates over healthcare.

    One of those efforts, the medical loss ratio rule, was touted by the Obama administration as a tool for lowering premiums, but in the long run, it may be having the opposite effect.

    The rule was one of the health reform law’s first consumer protections out of the gate, producing real benefits for people even before better-known provisions, like protections for patients with pre-existing health conditions, went into effect. At the time, Obama administration officials said the rule drove insurers to lower premiums, saving consumers an estimated $9 billion in the first three years. That was on top of the billions in rebates some insurers were forced to pay customers for failing to comply with the rule.

    A decade after it took effect, some say the medical loss ratio requirements, which forced health insurers to spend a minimum percentage of money on medical care, has produced mixed results. Many experts agree the rule helped ensure customers got more value for their premiums and prompted insurers to spend less money on things like advertising and brokers’ commissions. But evidence has emerged suggesting the rule may have resulted in higher medical spending at a time when an increasing number of Americans are struggling to afford care.

    Some industry insiders say companies have learned to work around the requirements to boost profits, and there are concerns that the rule resulted in less competition by spurring a flurry of mergers and acquisitions over the last several years.

    “Like many of Obamacare’s provisions that sound good, the MLR is harmful in practice,” said Brian Blase, a former White House National Economic Council official in the Trump administration.

    Medical loss ratio rebates by year and market
    Understanding the MLR

    In the simplest terms, the medical loss ratio represents the portion of premiums an insurer spends on medical care and things that improve quality, such as care coordination and patient education. A loss ratio of 84% means an insurer spent 84 cents of every dollar in premiums it collected from customers on medical claims. The rest goes toward administrative costs or is kept as profit.

    Since 2011, the ACA has required insurers in the individual and small group markets to spend at least 80 cents of every premium dollar on medical care and quality improvement; insurers in the fully insured large group market must spend 85 cents per dollar. Companies that don’t meet those minimums pay the difference to plan members.

    The goal of the MLR rule was simple: ensure people were getting a fair value for their premiums, according to Gary Cohen, Blue Shield of California’s vice president of government affairs and former CMS official who was charged with drafting the medical loss ratio regulations. That value—the minimum loss ratio thresholds—was set at levels that politicians could get behind and the industry could comfortably meet.

    Cohen said the rule succeeded in delivering on that promise. “Whether the program has been successful depends on whether you believe it was a good policy to make sure that everybody who is buying health coverage is getting at least that much value from the health plan that they’re buying. If you agree that was a good thing to do, then I think the MLR program has succeeded in doing that,” he said.

    Prior to the ACA, 64% of insurers had loss ratios high enough to meet the minimum requirement even before the rule went into effect, but just 43% of insurers in the individual market would have, according to a 2011 report from the U.S. Government Accountability Office. The average individual market MLR was close at 78.8%, while average loss ratios for small and large group insurers were 85% and 89.5%, respectively. Dozens of states had their own minimum loss ratio requirements, but they varied widely. For example, North Dakota imposed an MLR of 55% on individual insurers, while New Jersey required an MLR of 80%.

    The initial yardstick for the MLR rule’s success was the volume of rebates noncompliant insurers would have to pay. The federal government expected rebates would subside as health insurers got used to the law and set their premiums to more accurately reflect healthcare costs, Cohen said, and that’s generally how things played out.

    In the first year of the program, insurers across the individual, small group and large group markets paid nearly $1.1 billion in rebates for failing to meet minimum loss ratio requirements for plans sold in 2011. They quickly made changes to increase their MLRs, causing rebates to fall to $504 million in 2012 and $332 million in 2013.

    “There’s been billions of dollars issued over the years. But even if you’re not getting a rebate, that’s because your insurer is trying not to exceed those MLR thresholds, and so you might be benefiting without even getting a rebate,” said Cynthia Cox, vice president at the Kaiser Family Foundation.

    The volume of rebates has since surged again, reaching nearly $1.4 billion for 2018. Mark Hall, a law professor at Wake Forest University who tracks the outcomes of the MLR rule, said the rule served as a stabilizing force in the ACA marketplace beginning in 2017 when insurers began to claw their way back into the black after losing money in the first few years selling plans on the exchanges. Insurers raised premiums too high to make up for initially setting them too low and to protect themselves from the Trump administration’s decision to stop paying certain ACA subsidies for low-income people.

    Because the formula for calculating rebates uses three years of financial data, the rule allowed insurers to hold on to some of that extra premium revenue to recoup early losses, Hall explained. “It’s a buffering or balancing effect of that three-year rolling average that both protects the consumer against excessive prices but gives the insurer some comfort that they’re not going to have to eat a large loss in a single year just because they miscalculated,” he said.

    Though $1.4 billion in rebates sounds like a big number, it’s not much compared to the premium revenue the companies bring in. According to the Kaiser Family Foundation, Centene Corp. issued the largest rebates at $216.9 million for its individual market performance in 2018. That’s less than 2% of its commercial revenue that year.

    That might be why health insurers that once feared the mandate to spend a certain percentage on benefits now downplay its importance and characterize it as an insignificant provision. They once fought tooth and nail to classify as many expenses as possible as medical care and quality improvement so they could more easily meet the minimum requirements.

    They lost the battle to include broker commissions and anti-fraud programs as quality improvement expenses, but the final rule did include an adjustment to protect small insurers with low loss ratios from having to pay rebates.

    Kris Haltmeyer, a vice president at the Blue Cross and Blue Shield Association, said the requirements never had a big effect on how Blues plans operated. “Our plans have consistently run above the MLR threshold and it really hasn’t been a significant provision,” he said, though he did credit the rule for improving transparency.

    Whether the program has been successful depends on whether you believe it was a good policy to make sure that everybody who is buying health coverage is getting at least that much value from the health plan that they’re buying.”
    Gary Cohen
    Blue Shield of California's vice president of government affairs and former CMS official
    Reducing overhead

    Aside from rebates, the MLR rule drove insurers to operate more efficiently and cut administrative costs, Hall said. Insurers reduced overhead, which includes profits and administrative and sales costs, by $3 billion in the first three years, though it’s hard to parse how much of that can be attributed specifically to the MLR regulation, Haltmeyer’s research found.

    Lowering administrative costs may have come at the cost of competition, though. Nick Ortner, an actuary at Milliman, and S&P Global Ratings insurance analyst Deep Banerjee, both said the need to comply with the MLR likely encouraged health insurers to merge in a bid to gain scale to reduce their expenses so they could keep more money as profit. Research has shown that health insurer mergers result in higher premiums.

    “Some of the merger, buy-up activity would have happened anyway, because there still would have been that incentive to shrink expenses, but the MLR rule in some ways probably forced or at least motivated more of that action,” Ortner said.

    Dr. Richard Shinto, CEO of InnovaCare Health, which operates Medicare Advantage and Medicaid plans in Florida and Puerto Rico, said the rule forced insurers to rethink how they managed medical and administrative costs and encouraged investments in quality and better benefits. (Advantage and Medicaid plans are also required to meet minimum loss ratios.)

    “Everybody was managing medical costs to a degree, but if there were significant savings it really went to the health plans or providers. What the government was trying to do was drive those savings back into more benefits and better benefit design. I think they’ve done a good job of forcing that,” Shinto said, adding that the movement to address social determinants of health likely grew out of the MLR rule, at least in part.

    A ‘blunt tool’

    Despite the incentive, insurers spend less than 1% of premiums on quality improvement, according to research published by the Commonwealth Fund. And though the Obama administration claimed otherwise, the MLR rule did little to lower premiums. At the same time, it may have resulted in “substantially higher medical claims costs,” according to an October 2019 research paper published in the American Economic Journal: Applied Economics.

    Researchers compared changes in MLRs, claims and premiums of health insurers with historically low loss ratios to those who typically complied with the 80/20 rule before it took effect.

    They found that implementation of the MLR rule was associated with an abrupt increase in MLRs among insurers in both the individual and group markets with too-low loss ratios, and the increase was accomplished almost entirely by a rise in claims costs.

    There was some suggestive evidence that insurers cut administrative expenses, but not to the degree they increased claims costs.

    “It’s evidence that the medical loss ratio was an extremely blunt tool for what it was trying to accomplish,” said Steve Cicala, an assistant professor at the Harris School of Public Policy at the University of Chicago who co-authored the paper. “When you try to regulate profit margins, firms have an incentive to respond by strategically adjusting their costs.”

    Researchers were unable to explain how insurers hiked their claims costs, so it’s unclear how plan members were affected. Insurers could have paid hospitals and doctors more for the same services. Or they may have made coverage more generous by authorizing more services.

    “It might sound like potentially a good thing if people are going and getting more medical care. That’s not unambiguously a bad thing. But it does mean that—if we’re thinking about the world in terms of the cost of healthcare—costs are going up,” said Ethan Lieber, co-author of the paper and assistant economics professor at the University of Notre Dame.

    Another paper, published in January 2019 in the Journal of Risk and Insurance, similarly suggested insurers with too-low medical loss ratios between 2011 and 2015 came into compliance by increasing their claims costs, not lowering premiums. The effect was strong each year of the study period.

    It’s evidence that the medical loss ratio was an extremely blunt tool for what it was trying to accomplish. When you try to regulate profit margins, firms have an incentive to respond by strategically adjusting their costs.”
    Steve Cicala
    Assistant professor
    Harris School of Public Policy at the University of Chicago

    It further turned up an additional consequence: insurers that historically had loss ratios above the minimum threshold reduced their ratios so they were closer to the standard. That way, they could still be in compliance, but keep a little more profit.

    William Wempe, a professor of accounting at Texas Christian University who co-authored the paper, compared the behavior to a student with a 97-average doing just enough on the final exam to keep an A, but nothing more.

    “A large group plan with a 88% ratio (may) say we are only required to have 85%, so maybe we can be a little less generous paying claims or maybe we would ratchet up premiums a little bit, make a little more money for our investors, but still comply with the minimum requirement that the government’s put on us,” he explained.

    More than a few sources questioned the finding that insurers increased claims costs to comply with the MLR rule, all saying that competition would prevent that.

    “That doesn’t hold water in a lot of ways. Insurers have competitors both on and off the exchange market, so if an insurer’s strategy was to just pay providers more and thus increase premiums, they wouldn’t be competitive,” Cox said.

    And according to both Cohen and the National Association of Insurance Commissioners, which was charged with coming up with the methodology for calculating the loss ratios and rebates, the point was never to lower premiums, but to enhance “value.” The NAIC said it was known that the MLR rule could increase claims costs to some degree.

    Nevertheless, before the ACA, the Congressional Budget Office projected that the MLR provision would decrease premiums slightly. Moreover, the CMS in 2014 claimed insurers charged lower premiums as a result of the rule, saving consumers billions. Christen Linke Young, a fellow at the Brookings Institution and former CMS official, said it was understood the MLR was one tool to lower premiums and has helped constrain insurer pricing.

    There’s a lot of this that goes on in the industry. People will fudge a little bit one way or the other to get the MLR they need. If you’re at 82% and you need to be at 85%, it’s a big difference.”
    Dr. Mario Molina
    Former CEO of for-profit insurer Molina Healthcare
    A numbers game

    Dr. Mario Molina, the former CEO of for-profit insurer Molina Healthcare, said it’s clear the rule failed. A high loss ratio has come to represent better quality in the eyes of regulators and the public when the metric has nothing to do with quality, he said. Health plan presidents he oversaw when he was CEO would celebrate a low loss ratio as a sign they were managing medical costs well, but Molina would often find out they received a rate increase, which effectively lowered the MLR.

    Moreover, he said it’s easy for an insurer to “play games” with the medical loss ratio by reclassifying an administrative expense as a medical one or overestimating outstanding medical claims costs. An auditor would have to sign off on the insurers’ reports, of course, but auditor approval can be negotiated, he said.

    “There’s a lot of this that goes on in the industry,” Molina said. “People will fudge a little bit one way or the other to get the MLR they need. If you’re at 82% and you need to be at 85%, it’s a big difference. But if you’re close, you’ll manipulate it.” (He noted that during his time as CEO of Molina, the insurer was “very conservative” in its reporting, however.)

    Other insurance executives denied that companies game the MLR. But one 2018 academic research paper that’s currently under review suggests manipulation is fairly common. Researchers found evidence that health insurers whose medical loss ratios were below the ACA thresholds systematically adjusted their reported financial information to overestimate their incurred claims. This resulted in insurers paying out $219.2 million less in MLR rebates than they should have between 2011 and 2015, according to the findings.

    In an emailed statement, a CMS official said the agency reviews company MLR reports for consistency and performs in-depth MLR audits on a number of insurers each year, some of which have resulted in insurers paying additional rebates. The agency declined to comment on whether the MLR rule is achieving its intended results because it hasn’t had a chance to analyze the findings of newly published research.

    Meanwhile the Trump administration has encouraged the proliferation of insurance policies not subject to loss ratio requirements, including short-term plans, which set prices based on health status and don’t cover all the ACA essential benefits. The average loss ratio of the five short-term plans with the most enrollment in 2018 was 39%, according to NAIC data. Proponents of MLR requirements want them applied to those types of plans, too.

    “If we’re going to continue down the path of having alternatives to ACA-compliant plans … there ought to be an (MLR target) for short-term plans,” said Ken Janda, former CEO of Texas insurer Community Health Choice.

    That’s unlikely to happen, however. In the 2018 final rule expanding access to short-term plans, the CMS said the MLR “may be of limited utility in evaluating the efficiency of insurance coverage and may result in higher medical costs and premiums, less innovation in plan design, less consumer choice, and increased market concentration.”

    MORE FROM THE ACA ISSUE

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Solid sign-ups for Biden's new Obamacare coverage offer
    Solid sign-ups for Biden's new Obamacare coverage offer
    OU Health Physicians, Oklahoma Blues plan fail to reach new contract
    OU Health Physicians, Oklahoma Blues plan fail to reach new contract
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Minorities in Healthcare
          • - Luminaries
          • - Top 25 Minority Leaders
          • - Minorities to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Women Leaders in Healthcare Conference
        • Social Determinants of Health Symposium
        • Healthcare Transformation Summit
        • Leadership Symposium
        • Virtual Briefings
          • - Hospital of the Future
          • - Mental Health
          • - Patient Safety & Quality
          • - Strategic Marketing
          • - Virtual Health
          • - Workplace of the Future
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing