Insurers’ Medical Loss Ratios and Quality Improvement Spending in 2011

The Affordable Care Act’s medical loss ratio (MLR) regulation requires insurers to spend 80 percent or 85 percent of premiums on medical claims and quality improvements. In 2011, insurers falling below this minimum paid more than $1 billion in rebates. This brief examines how insurers spend their premium dollars—particularly their investment in quality improvement activities—focusing on differences among insurers based on corporate traits. In the aggregate, insurers paid less than 1 percent of premiums on either MLR rebates or quality improvement activities in 2011, with amounts varying by insurer type.