MLR: Well I'll be damned. I was even closer to the actual amount than I thought.

Last summer, as part of my ambitious Medical Loss Ratio project, I not only broke out the exact dollar amounts and number of enrollees receiving rebates for every insurance carrier in every state in the country before the data was made publicly available, but I even took a crack at projecting just how much I expected individual market MLR rebates to be for every state in 2020 as well.

Historically, the ACA's MLR provision paid out between $100 - $400 million per year from 2012 - 2018 in rebates to individual market enrollees, averaging around $186 million per year...until last year. Here's what I originally projected 2019 payments (paid out in 2020) would likely look like last August:

If you use Anderson's 7% and assume the final, national weighted average for 2020 comes in at around 0.5%, that means roughly 6.5% of that $93.2 billion could end up having to be rebated to enrollees....or potentially 1/3 of up to $6 billion.

The three-year rolling average means that the actual amount paid out would be 1/3 of that...perhaps $2 billion in September 2020.

Some people thought I was nuts to make this projection at the time, and to be fair, this was just a very rough back-of-the-envelope number. When I re-ran the numbers a few weeks later using a ton more hard data, I revised my projection for 2019 MLR rebates (again, to be paid out in August/September 2020) downwards a bit:

When I ran the numbers based on the actual data from 2017 and 2018 and project 2019's MLRs, I ended up with a somewhat smaller (but still massive) potential total for the Individual market: Perhaps $1.7 billion. Not bad, given that the $2 billion figure was complete spitballing. Of course, the $1.7 billion projection is still based on some major assumptions about the 2019 experience; it'll be interesting to see if I end up even remotely close to the actual amounts next August/September.

The exact amount of my projection was $1,708,175,707.

Then, back in April of this year, the Kaiser Family Foundation posted a preliminary analysis of the 2019 MLR data and concluded that...

Using preliminary data reported by insurers to state regulators and compiled by Market Farrah Associates, we estimate insurers will be issuing a total of about $2.7 billion across all markets – nearly doubling the previous record high of $1.4 billion last year. The amount varies by market, with insurers reporting about $2 billion in the individual market, $348 million in the small group market, and $341 million in the large group market. These amounts are preliminary estimates, and final rebate data will be available later this year.

The exact amount Kaiser projected for 2019 MLR payments going out this year were:

  • Individual Market: $1.97 billion to 4.74 million enrollees ($420/enrollee on average)
  • Small Group Market: $348 million to 189,000 members ($1,850/policyholder on average)
  • Large Group Market: $341 million to 2.99 million enrollees ($110/enrollee on average)
  • All 3 Markets: $2.66 billion to 7.91 million enrollees/members ($340/enrollee/member on average)

...leading me to give myself a pat on the back about being so accurate with my original spitballed $2.0 billion estimate.

Today, however, the actual, official 2019 MLR rebate reports have finally been released (they're much later than usual due to a combination of the COVID pandemic and the Risk Corridor payment lawsuit settlement), and check it out:

Welp.