IN THIS ISSUE

June marks the start of a new direction for Better Health News. We all want to live healthier lives, but CanDrugstore.com is about saving you money when it comes to your healthcare dollars.

So, it's time we stepped up and gave you the real health information you need to save more.

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The Medical Loss Ratio (MLR) is a guideline for your health insurance.

In essence, the MLR is the amount of your health insurance premiums that go towards paying for actual health benefits and care. This is opposed to money spent on marketing, salaries, and other overhead costs.

Weirdly enough, the acronym “Medical Loss Ratio” was coined by the insurance companies themselves. The “loss” part refers to the money the insurer loses when they have to pay out for medical care.

Wait, what?

Why is that a loss? Isn’t that a service?

Semantics aside, the MLR took center-stage with Obama’s Affordable Care Act. Here’s what you should know about the Medical Loss Ratio.

The Numbers

The Affordable Care Act made several reforms to private health insurance regulation. One aim was to increase insurance company accountability and transparency.

Here’s how it played out:

• Health insurers are required to report the portion of dollars spent on healthcare.

• Most insurance companies have to spend 80% of premium dollars on actual medical care.

• Some larger companies have to spend 85% of premium dollars on actual medical care, depending on the size of the market group.

One recent estimate shows that 25-30% of claim income is spent on “overhead,” which means profits, marketing, and administration. For the average American, this equals about $2,000 per person. Overall, the Act changes were meant to make insurers more efficient with their money.

So, what does this mean for the average person?

For Seniors...

Your Medicare drug coverage becomes far more affordable. As of January 2011, your prescription brand-name medicine gets a 50% discount. Your generic drugs will be 7% cheaper.

As 2020 draws nearer and the plan fully comes into being, your generic drug discount will increase to 25% and your brand-name discount will decrease to 25%. This encourages buying cheaper generic drugs.

This is of special benefit to low-income seniors without any additional Extra Help (which is available to those residents on Medicare drug plans).

As a senior, you may qualify for additional preventative care. All of these services will now be covered under Medicare:

• “Quit smoking” counseling

• Bone density measurements for osteoporosis screening

• Cholesterol screening

• Mammograms

• Cervical cancer screening

• Diabetes screening

For Young Adults...

Under the old rules, you were thrown off your parents’ medical plans when you turned 19. Now, you can be covered until age 26, even if you’re financially independent, married, or not living at home anymore.

For People with Pre-existing Conditions...

You now have coverage available if you were denied health insurance because of a pre-existing condition.

This plan, called the PCIP program, offers health benefits to the uninsurable. Benefits like hospital care, medication, and specialty care. Your premium will not be increased because of your condition.

The Bottom Line

If insurance providers fall below the 80% (or 85%) spending requirements, they owe you. It’s known that they can give you a rebate or lower your healthcare premiums, but many people don’t know what else insurance companies can do to make sure they’re following the rules.

These are big changes for big companies. To make things easier, the government is implementing changes slowly.

If the Affordable Care Act had been enacted in 2010, this would have equated to about $255 million back to Texans and $202 million back to Florida residents – over $100 per individual!

Now that Medical Loss Ratio changes are coming into effect, insurance providers have some hard choices to make if they fall below the 80% spending requirement.

Do they write you a check? Do they take the hit and lower your premiums?

The overall goal of the legislation was efficiency and accountability. Now, accountability is taken care of with reports that insurance companies have to publish. But, what about efficiency?

Turns out that insurance companies have more options than first imagined. Here’s how they can change to fit into the new efficiency requirements put in place by the Affordable Care Act.