Insurers' Medical Loss Ratios and Quality Improvement Spending in 2011

March 22, 2013

Authors: Mark A. Hall and Michael J. McCue
Contact: Mark A. Hall, J.D., Fred D. and Elizabeth L. Turnage Professor of Law and Public Health Wake Forest University, School of Law and School of Medicine,
Editor: Deborah Lorber



The Affordable Care Act’s medical loss ratio (MLR) regulation requires insurers to spend 80 percent or 85 percent of premiums on medical claims and quality improvements. In 2011, insurers falling below this minimum paid more than $1 billion in rebates. This brief examines how insurers spend their premium dollars—particularly their investment in quality improvement activities—focusing on differences among insurers based on corporate traits. In the aggregate, insurers paid less than 1 percent of premiums on either MLR rebates or quality improvement activities in 2011, with amounts varying by insurer type. Publicly traded insurers had significantly lower MLRs in each market segment (individual, small group, and large group), and were more likely to owe a rebate in most segments compared with non–publicly traded insurers. The median quality improvement expenditure per member among nonprofit and provider-sponsored insurers was more than the median among for-profit and non-provider-sponsored insurers.


Mark A. Hall and Michael J. McCue, Insurers' Medical Loss Ratios and Quality Improvement Spending in 2011, The Commonwealth Fund, March 2013