Medical-loss ratio saves big

The Affordable Care Act’s medical-loss ratio provision saved American consumers close to $1.5 billion in 2011, research finds.

The Commonwealth Fund’s study—based on financial reports filed by insurers with the National Association of Insurance Commissioners—found that administrative costs declined in 39 states, insurers in 37 states spent more of their customers’ premiums on medical care, operating costs declined in 34 states, and premium growth slowed, according to the Los Angeles Times.

Under the medical-loss ratio provision, private insurers must spend a set percentage of premium dollars directly on medical costs—80 percent and 85 percent for individual and group markets, respectively. Insurers that do not comply with the ratio must issue rebates to consumers.