AHIP Statement on the Medical Loss Ratio Requirement

For Immediate Release
April 26, 2012

Robert Zirkelbach

“The new medical loss ratio requirement (MLR) does nothing to address the real driver of premium increases: the underlying cost of medical care. Given the inherently unpredictable nature of health care costs, it is not surprising that some health plans expect to pay rebates to consumers in certain markets. However, the coverage disruptions and other unintended consequences of imposing a new arbitrary federal cap on health plan administrative costs are likely to outweigh any benefit these rebates will provide to consumers. Moreover, the taxes, benefit mandates, and other regulations included in the health care reform law will cause premium increases that far exceed the value of prospective rebates. For example, a technical analysis by Oliver Wyman estimates that the new health insurance tax included in the ACA “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.”

“Health plans are leading the way on delivery system reform and investing in quality improvement initiatives to ensure consumers are getting the best value for their health care dollar. The MLR regulation could turn-back-the-clock on these quality enhancing programs as well as fraud prevention initiatives while potentially inhibiting the next generation of delivery system reforms.”

Providing Health Benefits for Over 200 Million Americans.