Why Medical Loss Ratios Matter.

   Under the new Patient Protection and Affordable Care Act and its Regulations which are being finalized at this time, Health Insurance Companies must spend a minimum of 80% of their payments on actual Health benefits for Medical Care for sick Insureds.  That is the Medical Loss Ratio.  If Health Insurance Companies covered by the Act and its Regulations spend less than the Ratio of  Benefits to so-called Administrative Expenses or Overhead, they will have to rebate Premiums to Policyholders. 

   Medical Loss Ratios clearly matter.  The way they work is explained further in an excellent post by Bruce Japsen on Prescriptions Blog on the New York Times website, "Final Rules Set for Insurers on Spending Ratios," posted on December 12, 2011.

The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association's Insurance Coverage Litigation Committee.

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