EXCLUSIVE: US Consumers May Be Misled About How Much Insurers Actually Spend On Medical Care, Report Suggests

Some health insurers may be misleading consumers about how much they are actually spending on medical care, a new Insurance Watchdog Coalition report first obtained by The Daily Caller News Foundation suggests.

Medicare Advantage (MA) plans reported a Medical Loss Ratio (MLR) of nearly 90% in 2023, according to IWC’s report. Per their own filings, medical and prescription-drug claims comprised 82.5% of insurers’ total revenue, below the 85% federal requirement and $36 billion less than the figure they initially reported, the report alleges.

The Affordable Care Act (ACA) of 2010 — commonly known as Obamacare — mandates that insurers submit data on the amount of premium revenues spent on clinical services and quality improvement, also known as MLR, according to the Centers for Medicare and Medicaid Services (CMS). The ACA also requires health insurance companies to spend at least 80% to 85% of premium dollars on medical care, per CMS.

“Current MLR rules let plans count things that are not medical care as if they were,” the report claims. “Administrative costs — including portions of prior-authorization systems — count as ‘quality improvement.’”

Health insurers can also count benefits such as gym memberships and cash cards for everyday expenses as “medical spending,” per the report.