PPACA's Medical Loss Ratio Saved Individuals $2.1B in 2012

Health insurance customers on the individual market saved an estimated $2.1 billion last year thanks to the health law's medical loss ratio requirement that commercial insurers spend at least 80 percent of premium revenue from individual plans on medical care or rebate customers, according to a report by the Kaiser Family Foundation.

The authors of the report estimate premium rates nationwide were $1.9 billion lower in 2012 than they would have been without the cap placed by the MLR provision, which took effect in 2011 as part of the Patient Protection and Affordable Care Act. The report also notes health insurers expect to pay out $241 million this year to customers based on spending and revenue projections for 2012.

However, the report highlighted other benefits to consumers of the provision beyond the 80-20 requirement for rebates.

"Rebates represent only a portion, albeit the most concrete portion, of the MLR rule's savings to consumers," the authors wrote. Consumers and businesses, they continued, are charged lower premiums to begin with as insurers aim to price their plans to achieve the 80 percent sweet spot. As health insurers get closer to their target, consumers will see MLR-related savings in the form of smaller premium bills rather than reimbursement checks.

More Articles on Health Insurance:

Survey: More Employers Pushing for Value-Based Health Plans
Landmark Arkansas Health Insurance Exchange Gets 4 Payers on Board
D.C. Mandates Exchange-Based Small Business Health Plans

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars