California, other states consider raising minimum medical-loss ratios

We have bad news about insurance companies almost every day: fines over alleged rescissions, settlements for unfair business practices, and other various and sundry other problems. Under these circumstances, health insurers probably aren't too thrilled that lawmakers in several states are piling on by passing laws about minimum medical-loss ratios. The idea is to make sure that insurers aren't holding back on paying for care just to make their ratios look good.

By the way, for those not in the health plan biz, the medical-loss ratio is a formula that states which percentage of each premium dollar goes to medical care, so the closer the number gets to one, the less happy insurers get.

At least 15 states require insurance companies to release their medical-loss ratios and make certain that they meet a minimum. Now some other states are considering passing similar laws, even though insurance companies claim that they already meet the minimums. (Which raises the question: What are the insurance companies worried about if they are already meeting the requirements?)

California in particular has had a lot of scandals this year, and is looking to raise the minimum medical-loss ratio to 85 percent. Currently the worst medical-loss ratio in the state--from providers' standpoint, anyway--was posted by Great-West Healthcare of California, at 69.4 percent. Incidentally, since those figures were released Great-West was acquired by Cigna.

To learn more about medical-loss ratio laws:
-read this AMNews piece

Suggested Articles

Presidential candidate Kamala Harris wants to get rid of the tax break drug companies get for DTC ads

Healthcare software company Phreesia closed its first day of trading as a public company Thursday about 40% above its set price.

Growing the biosimilar market could lead to significant healthcare cost savings, according to a new report.