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The 2019 Health Insurance Medical Loss Ratio and Rebates Results: A Brief Summary

 

December 3, 2020

 

The Medical Loss Ratio (MLR) provision established by the Affordable Care Act (ACA) requires health insurers who fail to spend specified percentages of their premium income on medical and quality care improvement expenses to pay rebates to their customers.  The goal of this provision is to curb growth in health care premiums while ensuring that plans adequately cover healthcare expenses.  In 2017 and 2018, health plans reimbursed customers $707 million and $1.4 billion, respectively.  For 2019, due to three years of profitability and lower MLRs overall, led to $2.5 billion in rebates to over 11 million customers, equating to approximately $219 per beneficiary.

Key Details about the MLR

  • The ACA provision for rebates based on MLR applies to commercial (risk) insurance lines and does not apply to self-funded plans.
  • Beginning in 2014, rebate payments are determined by using an average MLR calculation using medical costs and premiums from the past three years.
  • For Individual and Small Group segments, insurers must spend 80% of their premium funds on health-related expenses.
  • For the Large Group segment, insurers must spend 85% of their premium funds on health-related expenses.

In November 2020, the Department of Health and Human Services (HHS) released the 2019 Medical Loss Ratio (MLR) data which includes MLR rebates due to consumers.  Subscribers to Mark Farrah Associates’ Health Coverage Portal™ and the SHCE & MLR Data may access this important data with the benefit of NAIC company codes mapped to HIOS codes used for government reporting by health plans.

In this Healthcare Business Strategy report, MFA summarizes key findings from the HHS report, with a focus on health plan performance as it relates to the Medical Loss Ratio and related rebates due to customers. 

State Focus

 

 States Leading in MLR Rebates

 State 

 Adjusted Premiums 

 2019 Total MLR Rebate 

 Rebate as a % of Premium 

 TX

 $22,885,979,328 

$279,816,162 

1.22% 

 FL

 $27,276,111,499 

$246,290,517 

0.90% 

 MO

 $6,885,652,869 

$192,765,761 

2.80% 

 PA

$14,576,043,874 

$166,262,468 

1.14% 

 VA

$10,747,164,134 

$162,676,818 

1.51% 

 IL

$15,930,141,900 

$132,427,486 

0.83% 

 TN

$5,191,062,722 

$129,303,855 

2.49% 

 CA

$80,319,018,699 

$111,290,349 

0.14% 

 AZ

$4,319,005,923 

$89,335,042 

2.07% 

 OK

$4,205,081,175 

$88,920,276 

2.11% 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements
 

MLR premiums and rebate figures were aggregated for all health plans that reported doing business in each state. For 2019, Texas led the country with nearly $280 million in MLR rebates, a significant increase from $93 million in 2018.  While Missouri was not the top state for rebate disbursements, the total amount of Missouri’s rebates represented a high percentage of total adjusted premiums at 2.8%, up from 0.87% in 2018.  This may indicate that health plans in Missouri spent less on medical and health care quality improvement costs as compared to premiums charged.   

 

Largest Increases in MLR Rebates

 State

 2019 Total MLR Rebate

 2018 MLR Rebate

 YOY Change in Rebate

 TX

$279,816,162 

$92,786,398 

$187,029,764 

 MO

$192,765,761 

$52,067,788 

$140,697,973 

 FL

$246,290,517 

$107,406,822 

$138,883,695 

 IL

$132,427,486 

$19,668,053 

$112,759,433 

 OK

$88,920,276 

$16,000,483 

$72,919,793 

 Total

$940,220,202 

$287,929,543 

$652,290,659 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements
 

As previously mentioned, total rebates paid for 2019 were $2.5 billion, up 78% from $1.4 billion in 2018.  The table above shows which states had the greatest overall year-over-year increases in aggregate MLR rebates paid by health plans.  However, as indicated in the chart below, not all states realized higher rebates for 2019.  Arizona, Minnesota, North Carolina, New Hampshire, and Indiana had the greatest overall decreases in aggregate MLR rebates paid by health plans.

 

Largest Decreases in MLR Rebates

 State

 2019 Total MLR Rebate

 2018 Total MLR Rebate

 YOY Change in Rebate

 AZ

$89,335,042 

$99,535,043 

($10,200,000) 

 MN

$42,167,584 

$50,249,199 

($8,081,615) 

 NC

$4,844,756 

$9,874,567 

($5,029,811) 

 NH

$23,046,305 

$27,088,031 

($4,041,726) 

 IN

$2,088,034 

$5,392,696 

($3,304,662) 

Total

$161,481,722 

$192,139,536 

($30,657,814) 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements
 

For this analysis, Mark Farrah Associates is reporting all data as filed with CMS in the annual MLR reporting requirements, including Puerto Rico and the Virgin Islands.  We are not adjusting the data to account for differences in the number of reporting plans between 2018 and 2019.      

Market Segment Analysis

MFA assessed the Individual, Small Group and Large Group comprehensive market’s Adjusted Premiums, MLR rebates and Weighted Average MLR for the leading companies.  This helps to provide additional competitive insights into how companies are navigating the ACA-regulated health insurance markets. The next three sections will address findings in each segment.

Individual Comprehensive

 

2019 Individual Comprehensive - Largest Segment Rebates

 Company

 Weighted Average MLR

 Adjusted Premium

 MLR Rebate

 Rebate as a % of Premium

 HCSC

73.16% 

$6,140,329,709 

$429,552,698 

7.00% 

 CENTENE

79.05% 

$12,024,083,371 

$382,209,095 

3.18% 

 GUIDEWELL MUTUAL 

78.02% 

$7,872,997,744 

$155,570,763 

1.98% 

 BCBS OF TN 

69.00% 

$762,415,450 

$82,340,869 

10.80% 

 ANTHEM

81.38% 

$5,047,382,581 

$78,139,494 

1.55% 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements
 

2019 MLR rebates paid for the individual comprehensive segment were $1.7 billion which is 2% of the $85.5 billion collected in premiums for this segment.  It is important to point out that for payment purposes, health insurance MLR rebates are calculated at the plan and state level.  HCSC leads all other companies in this segment with $430 million of rebates, or 7% of premium.  While not a leading plan in the segment overall, BCBS of TN did lead the segment with an MLR rebate as a percentage of premium equaling 10.8%.   With the exception of Anthem, the remaining companies had average MLRs below the ACA-established 80% minimum for the segment.  Anthem’s results in a handful of states including CO, MO & VA contributed to their MLR rebates due.  The majority of HCSC’s rebates were incurred in TX, where they will rebate over $250 million to customers, or 9.5% of adjusted premium.

 

2019 Individual Comprehensive - Segment Leaders

 Company

 Weighted Average MLR

 Adjusted Premium

 MLR Rebate

 Rebate as a % of Premium

 CENTENE

79.05% 

$12,024,083,371 

$382,209,095 

3.18% 

 GUIDEWELL MUTUAL

78.02% 

$7,872,997,744 

$155,570,763 

1.98%

 KAISER

95.71% 

$6,727,229,535 

$0 

 

 HCSC

73.16% 

$6,140,329,709 

$429,552,698 

7.00%

 BLUE SHIELD OF CA

82.09% 

$5,364,632,592 

$0 

 

 

 ANTHEM

81.38% 

$5,047,382,581 

$78,139,494 

1.55% 

 BCBS OF NC

80.00% 

$3,863,525,040 

$3,863,525 

0.10%

 CIGNA

77.90% 

$1,834,803,844 

$65,392,768 

3.56%

 INDEPENDENCE BLUE   CROSS

82.88% 

$1,726,713,078 

$11,584,072 

0.67%

 MOLINA

80.35% 

$1,675,081,371 

$17,243,635 

1.03% 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements

 

The above table provides a look at the largest plans in the Individual segment for 2019, based on premiums, independent of MLR rebates paid.  Centene led in this segment with $12 billion in Adjusted Premiums.  Centene’s weighted average MLR of 79.05% was below the average 81% for the segment leaders.  Kaiser’s 95.71% MLR, down from 98% in 2018, was the highest among the leaders in this segment.  HCSC average MLR of 73.16% was by far the lowest among the segment leaders. 

Small Group Comprehensive

 

2019 Small Group Comprehensive - Largest Segment Rebates

 Company

 Weighted Average MLR

 Adjusted Premium

 MLR Rebate

 Rebate as a % of Premium

 ANTHEM

79.42% 

$6,649,291,050 

$102,388,576 

1.54% 

 UNITEDHEALTH

83.04% 

$15,193,392,529 

$83,886,940 

0.55% 

 GUIDEWELL   MUTUAL

77.71% 

$1,170,456,202 

$40,655,318 

3.47% 

 BLUESHIELD OF   CA

79.00% 

$3,487,744,466 

$34,877,445 

1.00% 

 CAREFIRST

79.72% 

$1,739,416,218 

$30,508,778 

1.75% 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements

 

2019 MLR rebates for the Small Group segment were $423 million, or 0.58% of the $73.2 billion segment.  Within this segment, Anthem paid the highest volume of 2019 rebates with an aggregate outlay of over $102 million, 1.54% of their adjusted premium.  UnitedHealth ranked second with approximately $84 million in rebates which equated to 0.55% of their segment premiums.  Each company’s MLR rebates are calculated at the plan and state level.  All had MLRs below the ACA-established 80% segment minimum except for UnitedHealth.  However, UnitedHealth had affiliate plans with MLRs at the state level below the 80% standard which led to the rebates due.  Approximately $53 million of Anthem’s rebates were incurred in California.

 

2019 Small Group Comprehensive - Segment Leaders

 Company

 Weighted Average MLR

 Adjusted Premium

 MLR Rebate

 Rebate as a % of Premium

 UNITEDHEALTH

83.04% 

$15,193,392,529 

$83,886,940 

0.55% 

 HCSC

83.04% 

$7,196,299,405 

$28,159,291 

0.39% 

 ANTHEM

79.42% 

$6,649,291,050 

$102,388,576 

1.54%

 KAISER

94.10% 

$5,557,921,291 

$0 

 

 BLUE SHEILD OF CA

79.00% 

$3,487,744,466 

$34,877,445 

1.00% 

 HUMANA

85.19% 

$2,120,106,777 

$4,112,221 

0.19% 

 CAREFIRST 

79.72% 

$1,739,416,218 

$30,508,778 

1.75% 

 BCBS OF MI

81.60% 

$1,483,788,699 

$0 

 

 BCBS OF NJ

80.04% 

$1,445,410,148 

$5,754,739 

0.40%

 INDEPENDENCE BLUE   CROSS

79.21% 

$1,361,862,146 

$20,943,481 

1.54% 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements
 

The table above provides a look at the largest plans in the Small Group segment.  Kaiser and BCBS Michigan were two of the larger players in this segment that incurred no rebates in 2019.  Naturally, they each had average MLRs that were higher than their segment leading peers.  Based on percent of premium, CareFirst’s $30 million of rebates stood out and were mostly related to its insurance business in the state of Maryland.

Large Group Comprehensive

 

2019 Large Group Comprehensive - Largest Segment Rebates

 Company 

 Weighted Average MLR 

 Adjusted Premium 

 MLR Rebate 

 Rebate as a % of Premium 

 UNITEDHEALTH

86.30% 

$24,498,145,097 

$96,949,087 

0.40% 

 INDEPENDENCE BLUE   CROSS 

83.79% 

$2,040,704,085 

$63,227,211 

3.10% 

 GUIDEWELL MUTUAL

89.07% 

$6,228,561,749 

$36,013,939 

0.58% 

 CAREFIRST

90.50% 

$5,451,728,000 

$25,327,191 

0.46% 

 CIGNA

88.68% 

$10,955,563,846 

$19,041,699 

0.17% 

Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements
 

2019 MLR rebates for the $235 billion Large Group segment were $317 million.  Within the segment, UnitedHealth paid the highest volume of MLR rebates, outlaying over $96 million.  Independence Blue Cross’s $63 million in rebates ranked second, however, this equates to 3.1% of their segment premiums.  Once again, the company’s MLR rebates are calculated at the plan and state level.  Four of the top five companies required to pay Large Group rebates had average MLRs above the ACA-established 85% segment minimum.  However, all had affiliate plans with MLRs at the state level below the 85% standard leading to the rebates due.

 

2019 Large Group Comprehensive - Segment Leaders

 Company 

 Weighted Average MLR 

 Adjusted Premium 

 MLR Rebate 

 Rebate as a % of Premium 

 KAISER

91.83% 

$40,437,130,690 

$0 

 

 ANTHEM

89.81% 

$26,391,201,814 

$16,876,865 

0.06% 

 UNITEDHEALTH

86.30% 

$24,498,145,097 

$96,949,087 

0.40% 

 HCSC

91.02% 

$15,846,068,258 

$0 

 

 CVS

88.42% 

$14,609,669,153 

$8,877,817 

0.06%

 CIGNA

88.68% 

$10,955,563,846 

$19,041,699 

0.17% 

 GUIDEWELL   MUTUAL

89.07% 

$6,228,561,749 

$36,013,939 

0.58% 

 CAREFIRST

90.50% 

$5,451,728,000 

$25,327,191 

0.46% 

 BCBS OF MI

86.66% 

$5,119,640,885 

$0 

 

 BLUE SHIELD OF CA

87.99% 

$4,843,692,663 

$0 

 
Sources: Health Coverage PortalTM, Mark Farrah Associates, aggregate data observations from the HHS | CMS Annual MLR Reporting Requirements
 

The above table provides a look at the largest plans in the Large Group segment for 2019.  While this is the largest segment based on premiums, Large Group business generated the lowest amount of MLR rebate dollars in terms of percent of premiums with only 0.13% returned to customers.  UnitedHealth and GuideWell lead the segment with nearly $97 million and $36 million of rebates, respectively.

Conclusion

For the Small Group and Large Group segments, rebates paid to consumers continue to be a small portion of total premiums although the Small Group segment experienced a 35% increase in rebates paid in 2019 over 2018.  Rebates paid to Individual segment customers have more than doubled for 2019 due to three years of solid financial gains for insures in the segment.  This jump in rebates grew the average rebate from $208 per consumer in 2018 to $332 per consumer in 2019.  Furthermore, the number of consumers receiving rebates grew 40% to approximately 5.2 million.  Overall, for the Individual segment, insures returned 2% of their adjusted premiums back to consumers which, unlike previous years, is more financially significant.  It is also important to note that consumers benefitted from $3.7 billion in Health Care Quality improvements undertaken by insurance companies in 2019. 

SCHE & MLR Data

The data used in this analysis brief was obtained from Mark Farrah Associates' Health Coverage Portal™ as available from the Department of Health and Human Services.  Each year, MFA updates its products with the latest MLR data.  Additionally, MFA maintains financial data as well as enrollment and market share for the health insurance industry in the subscription-based Health Coverage Portal™.

About Mark Farrah Associates (MFA)

Mark Farrah Associates (MFA) is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry.  Our product portfolio includes Health Coverage Portal™, County Health Coverage™, Medicare Business Online™, Medicare Benefits Analyzer™, 5500 Employer Health Plus™, and Health Plans USA™.  For more information about these products, refer to the informational videos and brochures available under Our Products or call 724-338-4100.

Healthcare Business Strategy is a FREE monthly brief that presents analysis of important issues and developments affecting healthcare business today.  If you would like to be added to our email distribution list, please submit your email address to the "Subscribe to MFA Briefs" section at the bottom of this page.  

 

Glossary

 

Weighted Average MLR – For analysis purposes, Mark Farrah Associates calculated average MLR weighted on the adjusted premiums for each company by segment.  The MLRs used in the calculations are average ratios based upon 2019 data, as reported on line 5.4 of Part 3 of the HHS MLR and Rebate Calculation schedule.

 

Sources

Centers for Medicare & Medicaid Services

“Public Use File for 2019 (as of October 20, 2020)”

https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html

“MLR Refunds by State and Market for 2019” (as of October 16, 2020)”

https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html

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