Dive Brief:
- Under the Affordable Care Act, health insurance issuers are required to submit data on the proportion of premium revenues spent on clinical services and quality improvement, also known as the Medical Loss Ratio (MLR). They are also required to issue rebates to enrollees if this percentage does not meet minimum standards.
- According to The Commonwealth Fund, health insurers paid out more than $1 billion in rebates to consumers for failing to meet MLR requirements for 2011, $513 million for 2012, and $325 million for 2013, an indication that compliance is continuing to improve.
- Additionally, insurers were able to reduce their overhead costs by more than $3 billion over three years without substantially increasing their profits.
Dive Insight:
"The new federal regulation of health insurers' medical loss ratios continues to provide substantial consumer benefits in the third year of operation," The Commonwealth Fund said in its report. "These consumer gains have not come at the cost of substantially reduced competition or choice among insurers. Federal regulation of MLRs appears to be producing significant consumer benefits without causing any substantial harm to the insurance markets."