MLR Statute Credited with $3.4B Insurance Premium Cut

Margaret Dick Tocknell, for HealthLeaders Media , June 24, 2013

Both CMS and AHIP make good points, says Timothy Jost, a professor at Washington and Lee University School of Law who has studied the MLR process. "I think CMS is correct in its analysis that the main effect of the MLR has been to drive down premiums. Insurers respond that the main driver of healthcare premiums is increasing healthcare costs, and that's obviously true."

But while healthcare costs continue to increase, they are doing so at a much slower pace. A just released report from PricewaterhouseCoopers Health Research Institute's notes that for the fourth consecutive year, the pace of medical cost increases will slow. In 2014, healthcare costs are projected to increase by 6.5%, a full percentage point lower than the 2013 projected rate.

Jost, who is also a consumer representative on the National Association of Insurance Commissioners, says that despite the slowdown in healthcare costs and a corresponding drop in healthcare utilization, insurers did not respond by cutting premiums, and as a result there were often high profits for insurers on the for-profit side and large reserves for the not-for-profit insurers.

He notes that when the MLR was first implemented in 2011, insurers who didn't meet the MLR requirements found themselves owing 12.8 million members more than $1 billion in rebates.

That was something of a wake-up call for the health insurance industry.

1 | 2 | 3 | 4

Comments are moderated. Please be patient.


" style="font-family:inherit">Physician's Scathing Remarks Humiliate Patient, Cost Hospital
  • Alternative Staffing Arrangements
  • " style="font-family:inherit">The Perils of Cut-and-Paste Documentation
  • Aging Doctors: Time for Mandatory Competency Testing?
  • 7 Years In, Triple Aim Transcends Jargon
  • Alternative Staffing Arrangements
  • CMS Predictive Readmission Models 'Not Very Good'


    FREE e-Newsletters Join the Council Subscribe to HL magazine


    100 Winners Circle Suite 300
    Brentwood, TN 37027


    About | Advertise | Terms of Use | Privacy Policy | Reprints/Permissions | Contact
    © HealthLeaders Media 2014 a division of BLR All rights reserved.