US insurers accused of misleading consumers on medical spending

A report from the Insurance Watchdog Coalition (IWC) suggests that some health insurers may be misleading consumers regarding their actual spending on medical care. According to the analysis, Medicare Advantage plans reported a Medical Loss Ratio (MLR) of nearly 90% in 2023, yet their own filings indicate that medical and prescription-drug claims accounted for only 82.5% of total revenue. This figure falls below the 85% federal requirement mandated by the Affordable Care Act.

The IWC alleges that insurers are utilizing loopholes to meet these requirements by classifying non-medical expenses as “quality improvement.” These include administrative costs, portions of prior-authorization systems, and certain benefits like gym memberships or cash cards.

IWC Executive Director Mark Merritt stated that insurers have “rigged the system” by counting billions in overhead, marketing, and other costs as medical expenses. The report calls for increased transparency and recommends that the Centers for Medicare and Medicaid Services (CMS) require health plans to report actual payments more accurately.