The Medical Loss Ratio of the Health care Reform law is having a negative effect on carriers entering or staying in new markets.
What has happen is a carrier will go into a new market and that block of business is profitable. So let’s say they are operating at a 70% loss ratio. Under the new law they have to be at 80% or they have to rebate the difference to the insured’s.
The carriers are now trying to figure out how they can operate at the 80%. So until the figure out that equation they are pulling out of certain markets. So for now the MLR is reducing competition in the Individual and small group health markets.