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Good News: Many Insurers Already Meet MLR Requirements

Margaret Dick Tocknell, for HealthLeaders Media, December 7, 2011

Last week the Department of Health and Human Services issued its final rule for the medical loss ratio (MLR) in the Patient Protection and Affordable Care Act. The response was surprisingly reserved considering that the much-maligned MLR ranks second only to the Independent Payment Advisory Board as a flashpoint for Congress, where hearings have focused on potential economic chaos created by MLR.

There was none of the anticipated rage from health plans, which are now required to spend 80% to 85% of their premium dollars on enrollee medical care. The National Association of Insurance Commissioners seemed content to just thank HHS for including most of its recommendations.

Even insurance brokers and insurance agents, who have bitterly complained in congressional hearings that the MLR requirement will cost them their livelihood, provided a somewhat restrained response.

So what gives? I think it was the timely release of a General Accounting Office report that contains some unexpected news: At least 64% of all healthcare insurers in 2010 would have met or exceeded the 2011 MLR requirements contained in PPACA. Hmmm. Seems like there may not be that much to complain about, at least in terms of hitting the numbers.

The success rate is even higher when only insurers in the large and small group markets are considered: 70% and 77%, respectively, would have met the standard. Individual plans will have a tougher time?only 43% hit the PPACA requirement.

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