Wednesday, July 14, 2010


The regulations for PPACA’s limits on medical loss ratios have not yet been published, but faced with declines in enrollment due to the recession, insurers are busy making plans to slash administrative costs.

Just in the past couple of days, Blue Plans in North Carolina and Oklahoma have announced cuts of up to twenty percent in administration, and other plans are expected to follow. Marketing is one obvious target area, as this will be most affected by the implementation of insurance exchanges for individual and small group business.

While reform is expected to increase insurer enrollment and more than balance recession losses, the imposition of the MLR limits (85 percent for large groups, 80 percent for small groups and individual plans) is likely to force further cuts in administrative costs, especially for plans with the least large group business (in which typical MLRs are already above the 85 percent level).

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