<p>MLR rule speaks to Medical expenses, not General / Admin expenses.</p>
<p>Thanks, Justamom, that is good to know. It must be a new experience to be dealing with the fed gov’t on premium payments, no? It will be interesting to see what kind of a paying customer they are. :)</p>
<p>There are many, many, many “new experiences” where PPACA is concerned… :rolleyes:</p>
<p>JustaMom5465, did general and administrative expenses double in the individual insurance market because of ACA?</p>
<p>General and Admin expenses don’t really directly align with one market or another; remember they include all the expenses of the company, payroll, overhead, etc.</p>
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<p>It speaks to expenses in general. The medical loss ratio is the ratio between money that goes to medical expenses, and money that goes to everything else.</p>
<p>Adding onto my previous thoughts: It won’t just be premiums that are subsidized, it is also co-pays and deductibles at certain income levels, correct? That should be a lot of additional work to coordinate payments.</p>
<p>This would be a great time to be an Accounting major - insurance companies and the IRS will be hiring! :)</p>
<p>Son is accounting major. Yay! lol</p>
<p>The MLR is calculated as Medical Expenses divided by Premium.</p>
<p>“Retail vs. wholesale. They’ve got to be higher in the individual market. And that’s why the MLR rule is 80/20 in the individual market and 85/15 in the group market: because individual sales cost more.”</p>
<p>This is true, right?</p>
<p>The MLR ratio that is required is different in the individual market compared to the large employer market.</p>
<p>That is because costs are higher per dollar of premium in the individual
Market, right?</p>
<p>Otherwise, why wouldnt the required mlr be the same in the individual market compared to the large employer market?</p>
<p>Yes. Like an economy of scale. Where “costs” = “medical costs”, that’s the numerator. MLR doesn’t use Opex in the calc.</p>
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<p>Don’t we get non-medical expenses including profit just by (1 - MLR) * Premiums?</p>
<p>CF - you can’t really calc it that way since Opex are for the entire company and relate to all funding arrangement types while MLR only relates to Guaranteed Cost business (as opposed to, say, Administrative Service Only business). (At my company anyway) Indivual business is all Guaranteed Cost.</p>
<p>JustaMom5465, when you say administative services you are talking about administering self insured plans?</p>
<p>Does it cost more or less to administer self insurance plans compared to administering large insurance plans where you provide the insurance?</p>
<p>To be fair…</p>
<p>[Blue</a> Shield Disagrees With Jones’ Assessment of Premium Rate Hike - California Healthline](<a href=“http://www.californiahealthline.org/capitol-desk/2014/1/blue-shield-disagrees-with-jones-assessment-of-premium-rate-hike]Blue”>Blue Shield Disagrees With Jones’ Assessment of Premium Rate Hike | California Healthline)</p>
<p>This bugs me though…
Just adding up up rate increases as if there is no such thing as compounding. </p>
<p>“In a written statement, Blue Shield’s vice president of corporate communications Stephen Shivinsky said the DOI numbers don’t add up.
“The California Department of Insurance claim of average increases of 22.6% and 32.3% over 12 and 24 months, respectively, is not accurate,” Shivinsky said in his statement.
The actual increases, according to Shivinsky, were three increases – 7.9% in March 2012, 11.7% in March 2013 and this month’s 9.8%, which add up to a total of 29.4%, he wrote.”</p>
<p>dstark, yes.</p>
<p>I can’t comment on the cost of administration since I’m not involved in the UW or pricing of the cases. For guaranteed cost cases that would be baked into the Premium (along with the “cost” of the assumption of risk on our part). For ASO cases we simply charge a fee for the administration, pay claims (and then collect the claim dollars from the customer-so no charge for assumption of risk). </p>
<p>Premiums <> Fees, and only premiums are used in the MLR calc.</p>
<p>ps. most “large insurance plans” are self insured, as larger employer groups can take on that risk easier than a smaller customer.</p>
<p>Ok… JustaMom thanks for sharing your knowledge and time.</p>
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<p>That’s BS (as dstark says). You don’t add up rate increases. You multiply them, and when you do, you discover that the total increase is 1.079 * 1.117 * 1.098, which is 32.3%, just as the California Department of Insurance says. Almost a third! If Shivinsky is willing to lie like that, I don’t trust a word out of his mouth.</p>
<p>I think what Shivinsky said is really bad. Says a lot. </p>
<p>If the rate increases were a SAT question, There would be 5 possible answers, and Shivinsky’s answer would probably be one of the choices. There would be test takers that would just add up the rate increases and choose Shivinsky’s choice. That would be the wrong choice.</p>
<p>I am sure none of our kids would ever choose Shivinsky’s choice. :)</p>
<p>When somebody publishes what Shivinsky said, it kind of gives what Shivinsky said some validation. “Hey! What Shavinsky said is published. Must be true”.</p>
<p>After all, there are two sides of an issue. </p>
<p>Yeah…a correct side and a wrong side.</p>
<p>One thing this little comment shows is math ability is overrated. You can
have a successful career and be mathematically challenged. Or you can have a successful career if you are a good bs artist. :)</p>
<p>I see where the 29.4% number came from, and I also see where the 32.3% number came from, and I agree that 32.3% is the correct number. But I am not sure where the 22.6% number came from, as in “The California Department of Insurance claim of average increases of 22.6% and 32.3% over 12 and 24 months, respectively”</p>
<p>If rates are raised 7.9 % in March 2012 and then 11.7% in March 2013 I think it is misleading to claim rates were raised 20.5% in 12 months, even though it is technically accurate.</p>