Issuers of individual major medical coverage have reported a dramatic improvement in underwriting results for the second quarter of the year.
The issuers’ total medical expense ratio, or ratio of medical claim costs to premium revenue, fell to 77.2% for the quarter, down from 89.2% for the second quarter of 2016, according to new data from Mark Farrah Associates.
The issuers’ individual health revenue increased 8.6%, to $34 billion, and their health care costs fell 6.1%, to $26 billion.
Mark Farrah analysts also published similar data for employer plans, Medicare Advantage plans and managed Medicaid plans. The individual health policies had the lowest medical expense ratios, and the lowest health care expenses per enrollee per month.
In the fully insured group health market, for example, premium revenue increased 1.1%, year over year, and the medical expense ratio fell slightly, to 81.8%, from 82.3%.
In the Medicare Advantage market, premium revenue increased 7.1%, to $86 billion, but the medical expense ratio rose slightly, to 85.7%, from 85.2%.
The Affordable Care Act now requires health insurers to spend at least 80% of individual major medical revenue on health care and quality improvement activities. Issuers that miss the 80% target are supposed to send rebates to the enrollees.