Compliance with the new medical loss ratios by health plans could cost health insurance companies much more than originally predicted according to a recent study conducted by Weiss Ratings.
Margins for health insurance companies already complying with medical loss ratio and other health reform requirements in 2009 had margins (on average) of only 0.7% while companies not yet complying had margins (on average) of 6.3%. Complying companies actually had negative margins from premiums with investments pulling them into positive margin range. Weiss predicts that if investment income declines, many insurance companies could become financially unstable post-health reform.
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