MLR Statute Credited with $3.4B Insurance Premium Cut
Health insurance company medical loss ratios improved in 2011-2012 to drive a $3.4 billion reduction in healthcare premium costs. But MLR's influence is expected to wane.
Health insurance company medical loss ratios improved sufficiently from 2011 to 2012 to drive a $3.4 billion reduction in healthcare premium costs, according to an announcement last Thursday by Centers for Medicare & Medicaid Services.
The medical loss ratio (MLR) provision of the Patient Protection and Affordable Care Act holds insurers to administrative costs that do not exceed 15% to 20% of premium revenue and requires that the remaining 80% to 85% of premiums be dedicated to direct medical costs. Any excess must be rebated to consumers. CMS officials contend that the rebate threat is moving insurers to reduce premiums.
At a media briefing, Gary Cohen, CMS deputy administrator and director of Center for Consumer Information and Insurance Oversight, described the MLR as "a critical part of the Affordable Care Act" that helps consumers "keep their costs down."
But healthcare industry stakeholders disagree.
America's Health Insurance Plans, the health insurance industry's lobbying organization and no fan of the MLR, contends that the MLR does nothing to address the main drivers of healthcare costs and thus reduce premiums. Those drivers include the added cost of providing benefits to consumers, such as rising medical prices, changes in the covered population, and new benefits required by the healthcare reform law.
- 'Mega Boards' Could be Rural Healthcare Disruptor
- 1 in 5 Eligible Hospitals Penalized for HACs
- HL20: Rebecca Katz—Cooking Up Sustainable Nourishment
- Meaningful Use Payment Adjustments Begin
- HL20: Peter Semczuk, DDS, MPH—Taking on the Big Challenges
- PA hospital to pay $662,000 to settle Medicare fraud case
- Supreme Court to hear Obamacare subsidy challenge in March
- Dr. Oz gets fact-checked and the results aren't pretty
- How the high cost of medical care is affecting Americans
- Why single payer died in VT