GAO: Most Insurers Met Medical-Loss Ratio Rules in 2011, 2012
In 2011 and 2012, about 75% of health insurers spent enough of their customers' premiums on medical services to avoid having to pay refunds as required by the Affordable Care Act's medical-loss ratio provision, according to a new report from the Government Accountability Office, Modern Healthcare reports.
Under the MLR provision, insurers must issue refunds to customers if they spend less than 80% of the premiums they collect for plans sold on the individual and small group markets and less than 85% of plan premiums in the large group market on medical care.
According to GAO, insurers selling plans on the individual, small group and large group markets spent a median of 88% on medical care in 2011 and 2012. In 2011, insurers issued $1.1 billion in refunds, compared with just $520 million in 2012, the report found.
GAO also found that in 2012:
- Nearly one-third of insurers operating in the individual market had to issue refunds;
- 18.6% of insurers operating in the small group market had to issue refunds; and
- 13.7% of large group insurers had to issue refunds.
According to the report, insurers would have saved about 75% on those refunds if plans were permitted to include broker fees in their MLR calculations, meaning that reimbursements issued in 2012 would have totaled just over $400 million (Demko, Modern Healthcare, 7/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.