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.
- 'Kafkaesque' Value System Unfairly Penalizes Doctor Pay
- Proton Beam Therapy Poised for Growth in US
- mHealth Tackles Readmissions
- 4 Crucial Tactics for Reining in Healthcare Cost
- How Digital Strategy Shapes Patient Engagement at Boston Children's Hospital
- Some Cancer Hospitals' Quality Data Will Soon Be Public
- CNO Leads $1M Charge for New Scrubs, Uniforms
- How, and Why, to Recruit Male Nurses
- PA Ranks See 'Phenomenal Growth,' Lack of Diversity
- Half of All Primary Care, Internal Medicine Jobs Unfilled in 2013