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Whitney McFadden
AMSA National Health Policy Coordinator

Ran Tao
AMSA Associate National Health Policy Coordinator

The pace of progress is slow and incremental undermining of the ACA have begun. The Energy and Commerce Committee passed a piecemeal bill last week (H.R. 1206) to amend an important component of the ACA regulating insurance company profits. 

The new bill adds another layer of complexity to the medical loss ratio (MLR), a measure created by the ACA to monitor the percentage of premiums spent on medical coverage vs. administrative overhead. Currently the ACA mandates insurance companies to have a MLR of 80%, that is 80 cents of every dollar must be spent on medical claims and improving quality of care. However, the infrastructure of insurance companies is a delicate balance, one that rests on making enough profit to pay administrators and insurance brokers alike.

The original ACA policy proclaimed insurance broker and agent commission covered by the 20% allocated for administrative costs. It takes no expert to see that this shift in money balance will greatly restructure insurance company administration and force them to look critically at the business model. In the meantime, the house has decided to take on this burden and change the policies initially created to protect the patient. Insurance broker commission will no longer come from the 20% dedicated to administrative costs. This will shift the burden of cost to the other 80%, taking more money away from actual healthcare and putting it back in the pockets of the company itself.

The question then becomes, how much value does the ACA place on protecting patient premiums for medical care? If the solvency of insurance companies depends on changing this 80/20 balance, then we must either re-evaluate our definition of MLR or the way we are providing health coverage.

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