Administration issues important health consumer-protection rules

Health care consumers won an important victory today as the Obama Administration issued rules requiring insurance companies to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement, while the rest can go to profits, advertising, administrative costs and other expenses.

The share of premium dollars spent on care is known as the medical loss ratio. Regulating that share was a key provision of national health reform, the Affordable Care Act. The rules issued today are part of the ongoing implementation of the Affordable Care Act.

Requiring insurance companies to spend most of their revenue on patient care is essential to ensuring health consumers get maximum value for their money. Many health consumer advocates, including the Colorado Center on Law and Policy, fought successfully for a tight definition of medical care expenses so it wouldn't include expenses that don't actually help patients. Read background on our website and a good summary of the regulations on the federal government's health care reform website.

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