Reply #19: No, it wasn't 95% in the 1990's [View All]

[Schema Thing]

History and Evolution of MLR

In 1980, the National Association of Insurance Commissioners adopted “Guidelines for Filing of Rates for Individual Health Insurance Forms.”3 The Guidelines aimed at setting a threshold of what constitutes reasonable medical expense payments in comparison to premiums.4 The Guidelines delineated minimum MLR for determining whether premiums are reasonable.5 Here are some examples:

Optionally renewable policies (renewal at the option of the insurance company) – 60 percent
Guaranteed renewable policies (renewal cannot be declined for any reason, but company can revise rates for classes of individuals) –55 percent
Non-cancelable policies (no denial, no raise in rates) –50 percent6
According to Congressional research as spelled out in a November 2, 2009 open letter from Senator Jay Rockefeller, Chairman of the Commerce, Science and Transportation Committee, to H. Edward Hanway, the Chairman and Chief Executive Office of Cigna, in 2008, insurers in the individual market spent an average of 74 percent of premiums on health care, 80 percent in the small group market, and 84 percent in the large group market, with some insurers as low as 64 percent in the large group market.7 Insurers dispute the validity of the numbers. For instance, according to Cigna, where the study showed 87 percent MLR for individual market product, the MLR was truly 120 percent and Cigna was losing money.8

http://www.abanet.org/health/esource/Volume6/07/Stein.html