Obamacare's medical loss ratio provision saved $5 billion for consumers from 2011 through 2013, either through rebates or reduced plan spending on overhead, new Commonwealth Fund analysis finds.
Researchers Michael McCue of Virginia Commonwealth University and Mark Hall of the Wake Forest University School of Law found that in 2013 insurers paid out $325 million in consumer rebates, less than one-third the amount paid out in 2011. This is an indication, they say, that insurers are stepping up their compliance with the rule.
"The Affordable Care Act's medical loss ratio provision improves the protection health insurance affords people, by setting minimum standards for spending on medical care, while also encouraging insurers to invest in quality initiatives," Commonwealth Fund President David Blumenthal said in a statement. "These findings show that insurers can improve coverage for consumers while remaining competitive in the health insurance market."
Recommended For You
But, Commonwealth said, insurers' spending on quality improvement remained low, at less than 1 percent of premiums from 2011-2013.
The report also found that that the MLR provision hasn't substantially reduced competition in health insurance markets or consumers' choice of insurance plans. According to the study, there were about 500 insurers, covering 1,000 or more members, in each of the individual, small-group, and large-group markets in 2013 — a small reduction from 2011, but in line with insurance market consolidation trends.
And, the analysis found, insurers' total profits did decline, albeit slightly, by 0.2 percent since 2011. According to the report, there were modest profit margin decreases in the individual market, but they were offset by modest increases in the small- and large-group markets.
Under the MLR rule, in effect since 2011 — and met with criticism from the insurance industry — carriers are required to spend 80 percent (for small-group and individual plans) or 85 percent (for large-group plans) of premiums on actual medical care and quality improvement activities.
Industry groups have argued the impact of the MLR rules on agents and brokers has been damaging since many insurance carriers have significantly cut their agent compensation to comply with the regulations.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
