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An editorial discusses whether the Affordable Health Care Act is meeting the following three goals: (1) expanding coverage (and “reforming” the individual insurance market), (2) slowing health care spending and keeping it at a sustainable rate, and (3) improving clinical quality.

The Affordable Care Act's regulation of medical loss ratios requires health insurers to use at least 80-85 percent of the premiums they collect for direct medical expenses (care delivery) or for efforts to improve the quality of care. To gauge this rule's effect on insurers' financial performance, we measured changes between 2010 and 2011 in key financial ratios reflecting insurers' operating profits, administrative costs, and medical claims. We found that the largest changes occurred in the individual market, where for-profit insurers reduced their median administrative cost ratio and operating margin by more than two percentage points each, resulting in a seven-percentage-point increase in their median medical loss ratio. Financial ratios changed much less for insurers in the small- and large-group markets. [PUBLICATION ABSTRACT]

The financial collapse of CoOportunity Health, a not-for-profit insurer that achieved major enrollment success in Iowa and Nebraska, likely will lead to intensified scrutiny of other new co-op plans by state regulators and congressional Republicans. The fate of the fledgling insurer, established under the provisions of the healthcare reform law, also should serve as a cautionary tale for startup insurers looking to gain market share by offering low premiums in the Obamacare exchanges, where customers' medical costs are difficult to predict. But many co-op plans that struggled to attract customers during the first year of open enrollment are using aggressive pricing to be more competitive in the current open enrollment. Dana McNeill, CoOportunity's vice president for corporate communications, said her plan's future is uncertain. CoOportunity seems to have been a victim of its own enrollment success. It attracted about 120,000 customers for 2014, 10 times what it had anticipated. When those customers proved more expensive than hoped, the losses mounted.

This paper uses observations from a panel data set of 35 chief executive officers (CEOs) from 29 not-for-profit hospitals in Connecticut over the period 1998 to 2006 to investigate the relationship between CEO performance and pay. Both economic and charity performance measures are specified in the empirical model. The multiple regression results reveal that not-for-profit hospital CEOs, at least in Connecticut, are driven at the margin to increase the occupancy rate of privately insured patients at the expense of uncompensated care and public-pay patients. This type of behavior on the part of not-for-profit hospital CEOs calls into question the desirability of allowing these hospitals a tax exemption on earned income, property, and purchases.

Along with estimates suggesting that the admin- istrative expenses of private insurers in Canada are higher than those in the public sector, industry data also show that these amounts have increased over the past two decades. We compiled and adjusted for inflation the premium income col- lected and benefits paid for services that plan members received from for-profit health insurers from 1991 through 2011, using data from reports published by the Canadian Life and Health Insur- ance Association.10,11 The proportion of premium income spent on benefits is referred to as the \"medical loss ratio.\" The remainder consists of the amount spent on administration, the amount kept as profit and any other nonmedical spending (elements that are not separately reported by the Canadian Life and Health Insurance Association). Figures 1 to 3 show these numbers for the three major types of for-profit private health benefits plans in Canada: insured group plans (i.e., small and medium-sized employers; Figure 1), plans purchased by individuals (Figure 2) and self- insured group plans (i.e., those where large employers pay claims themselves, purchasing only processing services from the insurance com- pany; Figure 3). Figure 4 shows the same data for all plan types combined, along with policy divi- dends paid to some policyholders. Of note, these dividends never exceeded 3% of total premiums collected in any given year. As shown in Figures 1 and 2, medical loss ratios have dropped substantially for both group plans and individual plans over the past 20 years. For group plans, the percentage of premium rev- enue paid out as benefits dropped from 92% of premiums in 1991 to 74% in 2011. The differ- ence between premiums and benefits conse- quently tripled, reaching $4.4 billion in 2011. The Canadian Life and Health Insurance Associ- ation does not report dividend payments to policyholders by insurance type; however, even if one assumes that all policy dividends were paid out in the group insured market, the medical loss ratio was 77% in 2011 - notably lower than the 80% or 85% minimum now in place for private health insurance in the US. Premium rev- enue also increased much more rapidly than ben- efits paid in individual plans, with the medical loss ratio in these plans decreasing from 46% to 38% over the same period. Across all types of for-profit private insurance, industry data suggest that Canadians paid nearly $6.8 billion more in premiums than was paid out in benefits in 2011 (Figure 4). 12. Frakt A. JAMA forum: Are health insurers' administrative costs too high or too low? In: news@JAMA. Chicago (IL): American Med- ical Association; 2013 Apr. 24. Available: http://newsatjama.jama .com/2013/04/24/jama-forum-are-health-insurers-administrative -costs-too-high-or-too-low/ (accessed 2013 Apr. 24).

Background: Starting in 2011, the Affordable Care Act stipulates that insurers meet the minimum medical loss ratio (MLR) standards or issue rebates. An MLR is the proportion of premium revenues spent on clinical benefits, and must be at least 80% in the individual and small-group markets. Although some insurers have issued rebates, it is unclear whether they also adjusted MLRs and their components in ways to move toward compliance. Objective: To investigate early responses of individual and smallgroup insurers' MLR-related outcomes to the Affordable Care Act provisions. Research Design: Descriptive and multivariate analyses using 2010–2011 data from the National Association of Insurance Commissioners and other sources. Measures: Outcomes include MLRs, MLR components (claims incurred, premiums earned, quality improvement expenses, and fraud detection/recovery expenses), and administrative expenses. Results: In 2010, only 44.3% of individual market insurers reported MLRs of at least the stipulated level; by 2011, this percentage was 63.2%. Among small-group insurers, 74.9% had 2010 MLRs at or above the stipulated level, with little change in 2011. Individual insurers with 2010 MLRs >10 percentage points below the minimum exhibited the largest increases in MLRs, with changes occurring through increases in claims and indirectly through decreases in administrative expenses. Conclusions: Early responses to MLR regulation seem more pronounced in the individual versus small-group market, with insurers using both direct and indirect strategies for compliance. Because insurers learned of final MLR regulations only in late 2010, early responses may be limited and skewed more toward greater use of rebates than other adjustments.