U.S. health insurers now spend too much of individual major medical premium revenue on claims to send much excess revenue back to policyholders.
Individual health issuers are paying just $107 million in Affordable Care Act minimum medical loss ratio refunds for 2015.
That’s down from $238 million in refunds in 2014, and it’s the lowest level of individual health refunds that insurers have had to make since the minimum MLR provision took effect in 2011, according to a new minimum MLR refund commentary from the Center for Medicare & Medicaid Services.
The minimum MLR refund total for the small-group market rose to $154 million for 2015, from $140 million in 2014.
The refund total for the large-group market increased to $136 million, from $91 million.
The ACA minimum MLR provision requires major medical insurers to spend at least 85 percent of large-group revenue, and 80 percent of individual and small-group revenue, on health care and quality improvement services.
Carriers that fail to meet the minimum MLR targets must pay refunds to the insureds, or come up with other ways to compensate the insureds.
CMS officials say the minimum MLR provision helps consumers, by requiring insurers to offer a minimum level of coverage value to the insureds.
Critics say the provision hurts enrollees, by encouraging insurers to skimp on compensation for agents and brokers, and on other services and programs that hold down claim costs and improve customer service.
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