Medical Loss Ratio Data Analysis

With SCOTUS and the election behind us we are starting to see not only major regulatory packages but also some data on the impact of ACA provisions. Michael McCue and Mark Hall have important data and analysis on the impact of the Medical Loss Ration rule, here. From their conclusion:

[O]verall changes in financial measures that appear related to the MLR rule benefitted consumers in 2011 by reducing insurers’ total overhead—both profit and administrative costs—by $350 million. The individual market contributed the largest component of this decrease in total overhead, with a decline of $560 million. However, the small- and large-group markets offset a third of this decrease by increases in total overhead of $36 million and $174 million, respectively, in 2011…

Initially, the new minimum loss ratios appear to be producing important consumer benefits in the indi- vidual market, but much less so in the group markets. Although insurers have reduced their administrative costs and paid substantial rebates in all three market segments, the rule has not reduced total overhead mar- ket-wide in the small- and large-group segments. For that to occur, stronger measures may be needed, either in the form of rate regulation, tighter loss ratio rules, or enhanced competitive pressures.

[NPT]