The Affordable Care Act and Medical Loss Ratios: No Impact in First Three Years.

The Patient Protection and Affordable Care Act (ACA) set limits on insurers' overhead, mandating a medical loss ratio (MLR) of at least 80 percent in the individual and small-group markets and 85 percent in the large-group market starting in 2011. In implementing the law, the Obama administration introduced new rules that changed (and inflated) how insurers calculate MLRs, distorting time trends. We used insurers' filings with the U.S. Securities and Exchange Commission to calculate the largest insurers' MLRs before and after the ACA regulations took effect, using a constant definition of MLR. MLRs averaged 83.04 percent in the three years before reform and 83.05 percent in the three years after reform. We conclude that the ACA had no impact on insurance industry overhead spending.