The Affordable Care Act (health care reform law) requires health plans to meet a minimum medical loss ratio (MLR) , which varies according to market. Health insurance issuers must meet a minimum medical loss ratio of 85% in the fully insured large group market and 80% in the fully insured small group and individual markets.

The health care reform law also requires health plans to file a medical loss ratio report each year with the Department of Health and Human Services. On June 1, 2013, all insurance carrier  filed the required medical loss ratio report for the 2012 calendar year.

Anthem announced that they met the required loss ratio in the large group, small group, and individual markets for the California Department of Insurance (CDI). Additionally, the large group and individual markets for the Department of Managed Health Care (DMHC) met the required loss ratio, but the small group market for the DMHC did not. Anthem will sent a to administrator of the small groups a rebate check with a letter of explanation.

Aetna announced also that they calculation of the MLR were pretty precise and they will pay out $27.8 million for the 2012 experience year. This total is significantly lower than last year and is a clear indication that Aetna met their goal—to price the business so that they can deliver the greatest value to their customers, remain competitive in the market and grow their business. In this second year of MLR reporting, Aetna’s rebates represent 0.2 percent of the premiums they have collected. The rebates they  are paying are modest, and most policyholders won’t receive a rebate at all.

The Medical Loss Reports are welcome news as they  force the insurance carriers to calculate their business expenditures precisely, which helps to keep the premium in accordance to the health care cost. Unfortunately in the Affordable Care Act are not many measures  created to slow down the health care cost explosion. The Health Care Cost especially in California is very high and in relationship to Germany and Switzerland, we spend double the money on the same healthcare.  I doubt that we are getting double as good a service as in Europe.