Healthcare reform is a very large puzzle. Talking about only one piece at a time makes it difficult to convey the big picture of our health care system problems and fixes. The piece of the Affordable Care Act in the news recently is the exciting subject of medical loss ratios. In the overall scheme of the reform law, this is a positive part of the legislation.
What is a medical loss ratio? Get this – it is how much of your premium dollar is a loss to the insurance company in the form of paying for your medical benefits. As T.R. Reid says, isn’t this backwards? For you, the goal should be to spend as much of your premium dollar on medical benefits, and for the insurance company to have very little overhead. The unfortunate vernacular of “medical loss” is something the health insurance industry wishes they could put back in the bottle.