New Patient Protection and Affordable Care Act (PPACA) programs and rules may have cut gross profit ratios at U.S. individual health insurance operations by more than 40 percent in 2014.
Lisa Clemans-Cope and Michael Karpman, analysts at the Urban Institute, have published summary data on the effects of PPACA changes on individual major medical underwriting results in a set of two papers based on carrier financial data filed with the National Association of Insurance Commissioners (NAIC).
For U.S. individual health insurance operations, the average gross operating profit ratio plunged to 8 percent in in 2014, from 14 percent in 2013. The 6-percentage-point drop amounted to 43 percent of the 2013 gross profit ratio.
In the small-group market, the gross operating profit ratio fell to 15 percent, from 16 percent.
In the large-group market, the gross operating profit ratio fell to 9 percent, from 10 percent.
In 10 states, PPACA changes helped push preliminary 2014 individual market medical loss ratio (MLR) averages over 100 percent.