By NextBestFitTighter medical-loss ratios and non-profit requirement
Raise the required share of premiums spent on care, and require non-profit status, as in Germany or Switzerland.
Draft decision:RejectedConfidence: high · not yet reviewed
Requires a multi-payer system.
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This path
Tighter medical-loss ratios and non-profit requirement
Requires:
Regulated multi-payer: everyone must have a non-profit or tightly regulated planTens of millions of people have no coverageRejectedConcrete changes if chosen
What would actually have to change in law, agencies, payment rules, or systems.
- Raise the medical-loss ratio to 90%+
- Require non-profit status for standard plans
- Count vertically integrated provider profits toward the MLR
Effects
Each effect has its own page: the evidence, the case that it is or isn't a real cost, and whom it affects.
What it fixes
- Insurer overhead and profit
Requiring more premium revenue to go to care and requiring nonprofit status reduces profit leakage while retaining multiple plans.
- Losing the choice of health plan and insurer competition
Premium-spending requirements and nonprofit status preserve multiple plans.
What it creates or worsens
- Raises spending or loosens control over it
Insurers may increase total spending to enlarge their permitted overhead.
- Requires difficult enforcement
Vertical integration can hide profits despite premium-spending rules.
Who's affected
Who gains
- People with employer coverage
- Insurer overhead and profit: Premiums pay for insurer overhead and profit.
- Losing the choice of health plan and insurer competition: They can't keep or pick a plan they like, or switch if service is poor.
Who loses
- Health insurers, brokers, and their shareholders
- Insurer overhead and profit: Overhead and profit are insurers' income.
- Taxpayers and public budgets
- Raises spending or loosens control over it: Public budgets pay the added spending.
Where it has been tried
- Switzerland: In 2023, administrative costs for Switzerland's compulsory basic health insurance equaled 4.9% of earned premiums.