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December 29, 2017 at 09:47 AM
The Centers for Medicare and Medicaid Services has given U.S. health insurers bad news and good news about how individual health coverage performed in 2016.
The bad news is that rising claims ate up more premium revenue, squeezing underwriting gains.
The good news is that fewer insurers earned enough to owe rebates to the enrollees.
(Related: Former Health Insurer General Counsel Gets 6 Months in Prison)
CMS published data on health insurers’ 2016 performance in a new Affordable Care Act medical loss ratio (MLR) program report. A copy of the report is available here.
The Affordable Care Act minimum MLR provision requires issuers of non-grandfathered major medical coverage to spend at least 80% of individual and small-group premium revenue on health care and quality improvement activities. Issuers that miss the MLR target are supposed to pay rebates.
For large-group coverage, the minimum MLR is 85% of revenue.
Here’s what happened to the insurers in 2016.
Individual
The average MLR increased to 92.9% in 2016, from 91.8% in 2015.
The percentage of enrollees covered by issuers that paid rebates fell to 5%, from 6.7%.
