How to Improve the Health Insurance Market Using Medical Loss Ratios

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Stacey Pogue /(512) 320-0222 x 117

May 14, 2009

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One in four Texans lacks health insurance. All of us pay for care for the uninsured through taxes and higher health insurance premiums. We need to strengthen our private health insurance market to ensure more of us are covered and all of us are getting the most for our health care dollar. This policy page outlines one way to strengthen our private market—the required disclosure of medical loss ratios. A medical loss ratio is a number calculated by dividing the cost of health insurance claims paid by the amount of health insurance premiums collected to show the percentage of premiums that go to paying for health care rather than insurance company administration and profits. Requiring disclosure of medical loss ratios increases the efficiency of the market by empowering consumers to shop for policies with a better understanding of what they get for their premium dollars. This policy page also discusses how regulators can use medical loss ratios to strengthen the market.