The Affordable Care Act’s Medical Loss Ratio Rule’s Application to Medicare Advantage and Prescription Drug Plans

One of the key components of the new Affordable Care Act is its medical loss ratio rule. The rule seeks to control health care costs by requiring medical insurers who don't spend at least 80 to 85 percent of their
premium earnings on health care — rather than on marketing and
administrative expenses — to rebate the excess non-health care
spending to their consumers. (Sometimes those consumers will be
individuals; other times, they will be employers who purchased health
care for their employees.) Last year, insurers rebated about $1.2 billion under the rule. We have blogged about the rule several times, including here and here. As this article by Ben Goad explains, the feds have proposed a regulation, currently being reviewed by the Office of Management and Budget's Office of Information and Regulatory Affairs, that will extend the rule to prescription drug plans and Medicare Advantage plans beginning next January.