Interim Rule on Medical Loss Ratio Gives Consumers a Meaningful Measure to Evaluate Insurance Plans

November 22, 2010

WASHINGTON, D.C. – November 22, 2010 – The U.S. Department of Health and Human Services today released an interim final rule detailing how health insurers should calculate and define their plans’ medical loss ratio (MLR), the percentage of premiums spent on benefits versus administrative costs, under the Affordable Care Act.

Beginning in 2011, the new law requires individual and small-group plans to have an MLR of at least 80 percent, and large-group plans to have an MLR of at least 85 percent. The American Cancer Society Cancer Action Network (ACS CAN), the advocacy affiliate of the American Cancer Society, urged that the regulation carefully define MLR to ensure that as much spending as possible by insurers goes to services intended to improve patient health rather than to company profits and administrative expenses.

Following is a statement from Stephen Finan, ACS CAN’s senior director of policy. Finan is also a consumer representative to the National Association of Insurance Commissioners and was one of the leading advocates of a careful MLR definition that would benefit patients.

“The Affordable Care Act for the first time requires health insurance companies to disclose information that is intended to help consumers understand the value they are getting for the premiums they pay. This strong rule will help to ensure that patients are accurately informed about the portion of their premiums that are spent on medical care instead of company profits, broker commissions or administrative costs. It signifies the start of a critical consumer-education process that will finally help people with cancer or at risk for cancer to make informed decisions about the plans they purchase.

“The rule mostly adheres to the recommendation made by the National Association of Insurance Commissioners (NAIC) and supported by NAIC’s consumer representatives to adopt a careful definition of insurance company spending on patient health. For example, the regulation excludes broker commissions from the medical loss ratio calculation. It also rejects requests by large insurers to aggregate the medical loss ratio of their plans on a nationwide basis, a move that would have allowed insurers to offset high-quality plans sold in one region of the country with low-quality plans sold in another. By instead limiting aggregation to plans sold within a given state, the regulation will help to reduce the potential for abuse and ensure that consumers receive information that is accurate and useful for plans in their market.

“Unfortunately, the rule also gives an exemption to limited-coverage health plans, also called ‘mini-med’ plans, which will not have to comply with the MLR calculation for one year.  ACS CAN acknowledges that to maintain stability in the insurance market, all plans may not be able to immediately conform to the MLR calculation under the rule. Immediate compliance with the MLR calculation could result in termination of coverage for people who would otherwise have no other coverage alternative. ACS CAN will monitor consumer experiences and encourage the administration to develop a comprehensive plan to bridge the transition to 2014, when all plans will be required to be in full compliance with the rule. All families affected by cancer need meaningful coverage that will guarantee them access to the full spectrum of evidence-based care.”

ACS CAN, the leading voice of patients in the health care debate, is working to ensure that the Affordable Care Act is implemented as strongly as possible for cancer patients, survivors and caregivers. For more information, visit

ACS CAN, the nonprofit, nonpartisan advocacy affiliate of the American Cancer Society, supports evidence-based policy and legislative solutions designed to eliminate cancer as a major health problem. ACS CAN works to encourage elected officials and candidates to make cancer a top national priority. ACS CAN gives ordinary people extraordinary power to fight cancer with the training and tools they need to make their voices heard. For more information, visit

Alissa Havens or Steven Weiss
American Cancer Society Cancer Action Network
Phone: (202) 661-5772 or (202) 661-5711
Email: [email protected]  or [email protected]  

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