Indeed, the small group market, which is often identified as the market that will suffer the most negative impact from PPACA in terms of premium increases and regulatory burden, accounts for 40% of the total 2012 rebate, or $203.3 million.
The MLR is a "transitional program," Jost says, as the MLR moves to three-year averaging in 2014 and rebates are paid only after accounting for state-based reinsurance and risk adjustment programs and the federal risk corridors program. Those programs are expected to protect against adverse selection and stabilize premiums in the individual and small group markets as health insurance exchanges begin operation.
Jost says the MLR has played a role in improving insurer efficiencies and forcing insurance companies to acknowledge that healthcare costs aren't increasing now at the same rate as they did earlier in the decade. But going forward, the MLR will be a smaller factor "because of the other reform programs coming into effect to try to stabilize the market."
He adds that stricter rate review and increased competition among insurers in the insurance exchanges will play roles in holding premium costs down.
CMS's Cohen also views the MLR influence as somewhat fleeting, especially as additional parts of the PPACA go into effect and other market forces, such as competition, influence premium rates. "Over time, we expect that there will be competitive markets everywhere and premium rates will reflect that," he says.