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Copyright © 1997 by Project HOPE
Use and abuse of the medical loss ratio to measure health plan performance
This paper examines the use and abuse of the medical loss ratio in the contemporary health care system and health policy debate. It begins with a survey of the ways in which the medical loss ratio has been interpreted to be something it is not, such as a measure of quality or efficiency. It then analyzes key organizational features of the emerging health care system that complicate measures of financial performance, including integration between payers and providers, diversification of payers across multiple products and distribution channels, and geographic expansion across metropolitan and state lines. These issues are illustrated using medical loss ratios from a range of nonprofit and for-profit health plans. The paper then sketches a strategy for improving the public's understanding of health plan performance as an alternative to continued reliance on the flawed medical loss ratio. This strategy incorporates data on structure and process, service quality, and financial performance. This article has been cited by other articles:
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