Solid analysis from Citi showing commercial risk health plans posted a combined medical cost ratio of 84.2% in 2011. MCR in the small group market was better than average at 79.9%, while individual came in at 80.6%, and large group was the highest at 86.2%.
The plans in the analysis represent about 60 million members in 25 states and account for $260 billion in annual premiums. Combined underwriting margin was 2.6% in 2011 for commercial risk plans. Citi warns, however:
We don’t really buy the underwriting margins reported by the plans. For example, in the small group product, the plans reported an overall MLR of less than 80%, and an underwriting margin of only 3%, which doesn’t make sense. The issue is probably that many plans don’t report true SG&A in the stat filings, but rather, a management fee that is paid to the parent company.