Analyzing the Impact of the Medical Loss Ratio Under Health Reform on the Individual Market for Coverage in Each State

Using data from the NAIC, the researchers (1) estimated the number of individual market insurers in each state that, based on current business operations, will likely not meet a PPACA-mandated minimum 80 percent medical loss ratio (MLR) threshold, (2) estimated the corresponding number of enrollees served by these insurers, (3) analyzed volatility in member months, premiums per member per month (PMPM), claims PMPM, and MLRs within states for 2001-2009 in order to establish a baseline for individual market functioning prior to MLR implementation, and (4) documented the strengths and weaknesses of the NAIC data as a tool for predicting the impact of the minimum MLR requirement in each state on market stability.   The purpose of this project was to estimate the potential impact of the minimum 80 percent MLR on insurers and enrollees in the individual market in each state.