Medical Loss Ratio Under the ACA

The Medical Loss Ratio is an attempt by Congress to cap revenue for insurance providers by mandating how each dollar of income is spent. However, the rule creates unintended incentives that can have deleterious market impacts. As one economist put it, “The Medical Loss Ratio is an accounting monstrosity, a convolution of data from myriad products, distribution channels, and geographical regions that enthralls the unsophisticated observer and distorts policy discourse.”

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