According to the Affordable Care Act, what is the term used to describe the proportion of premium revenues spent on clinical services and quality improvements?

The Medical Loss Ratio is the term defined by the Affordable Care Act (ACA) that refers to the proportion of premium revenues that health insurance companies are required to spend on clinical services and quality improvements rather than on administrative costs, marketing, or profits. This requirement aims to ensure that a significant majority of premium dollars are utilized for providing medical care and improving health outcomes.

Under the ACA, insurers are expected to spend at least 80% of the premium dollars collected from individual and small group policies on medical care and quality improvements. For larger group policies, the threshold is set at 85%. If insurers fail to meet these standards, they must issue rebates to policyholders.

Understanding the Medical Loss Ratio is crucial because it directly impacts how insurance companies operate and how they allocate their funds, ultimately affecting the affordability and quality of healthcare services.