http://obamacarefacts.com/obamacare-rate...0-20-rule/
The ACA is designed to control costs
The ACA is designed to control costs
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Medical Loss Ratio / 80/20 Rule – Insurance companies have to spend at least 80 percent of premium dollars on claims and activities to improve health care quality. 85% in large group markets.
The medical loss ratio, or 80/20 rule, helps to decrease the growth in premium rates. Since insurance companies have stricter regulations on what they can spend your premiums on there is less incentive for them to inflate rates.
The 80/20 Rule generally requires insurance companies to spend at least 80% of the money they take in on premiums on your health care and quality improvement activities instead of administrative, overhead, and marketing costs.
The 80/20 rule is sometimes known as Medical Loss Ratio, or MLR. If an insurance company uses 80 cents out of every premium dollar to pay for your medical claims and activities that improve the quality of care, the company has a Medical Loss Ratio of 80%.
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