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How strong will this 85% medical loss ratio cap on insurance companies be? [View All]

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andym Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-01-09 07:57 PM
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How strong will this 85% medical loss ratio cap on insurance companies be?
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Edited on Sun Nov-01-09 07:59 PM by andym
This looked interesting to me:
--based on the definition it seems that 85% will not be a welcome number for the insurers.

From http://energycommerce.house.gov/Press_111/health_care/h...

Sec. 102. Ensuring value and lower premiums. Amends the Public Health Service Act to require health
insurance issuers in the small and large group market to meet a medical loss ratio of not less than 85%, effective
for plan years beginning January 1, 2010. Directs the Secretary to require that plans in the individual market
also meet a medical loss ratio of not less than 85% so long as it does not destabilize the existing individual
market. If plans exceed that limit, rebates to enrollees are required . In determining the methodology for the
medical loss ratio, the Secretary is to design it to ensure adequate participation by issuers, competition in the
market, and value for consumers.

What are the loopholes? ("destabiilize the existing market?") How can it be made stronger?

Here is a definition of medical loss ratio from http://www.washingtonpost.com/wp-dyn/content/article/20...

"In health insurance, the fraction of revenue from a plan's premiums that goes to pay for medical services.

The portion of health plan revenue that does not cover administrative or marketing expenses, taxes and profits.

Viewed from different angles, a measure of the profitability of a health insurer, the quality of health care enjoyed by its customers, the competitiveness of pricing in the marketplace or the efficiency of its non-medical activities.

A number that traditionally ranges from 75 percent for the most profitable and efficient plans to more than 100 percent for money-losing plans.

For Aetna, a figure that increased last quarter from 74.6 to 79.4, causing a 20 percent plunge in its share price when it was announced.

According to analysts, the best indicator of a future turn in the health-insurance industry's profit cycle. "
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