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Abstract:
Medical loss ratios indicate the proportion of total operating revenue spent for health care. Managed care organizations monitor these ratios carefully to keep them from surpassing predetermined targets. The same is true of administrative expense ratios. Low medical loss and high administrative expense ratios have become political hot buttons for advocacy groups unhappy with managed care's growing displacement for fee-for-service medicine.
Insights
Medical loss ratios track healthcare spending from revenue. Managed care organizations closely monitor these and administrative expense ratios, as they are key political issues.
Area of Science:
- Health Services Research
- Healthcare Management
Background:
- Medical loss ratios represent the proportion of revenue spent on healthcare.
- Managed care organizations (MCOs) closely monitor these ratios and administrative expense ratios.
- These financial metrics are increasingly scrutinized by advocacy groups.
Purpose of the Study:
- To explain the significance of medical loss ratios and administrative expense ratios in managed care.
- To highlight the political implications of these financial metrics.
Main Methods:
- Analysis of financial reporting in managed care organizations.
- Review of advocacy group positions on healthcare spending.
Main Results:
- Medical loss ratios are a key performance indicator for MCOs.
- High administrative expense ratios are a point of contention for consumer advocacy groups.
- These ratios influence the debate between managed care and fee-for-service models.
Conclusions:
- Monitoring medical loss and administrative expense ratios is crucial for managed care organizations.
- These financial metrics have significant political and public relations implications.