Question

By requiring a minimum medical loss ratio, an insurance company provides greater value to its policyholders when a ________ percentage of premiums is used for healthcare costs versus administrative expenses or profits.

Answer 1

Answer: 15% or 20% on administrative expensive or profit

Explanation: medical loss ratio specify maximum percentage

Insurers can spend on administrative cost

Answer 2

Higher

Step-by-step explanation:

Medical loss ratio is a percentage of premium dollars spent by a health plan on medical claims and quality improvements as against the percentage of the premium dollars spent on administrative cost. A higher percentage of the premium dollars must go to health care cost over administrative expenses or profits. Accordingly, profits or administrative expenses are expected not to make more than 20%, thus making insurance company provides more value in healthcare cost in 80% of the premiums. Rebates are remitted to insured if the administrative costs exceeds 20%.