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what insurers are allowed to spend on non-direct health care does nothing to protect consumers from the damage that will result from loss of competition in the market. 90 Furthermore, there are concerns that MLR limitations could be cleverly gamed in a way to relabel profits as costs or, similar to other sections of the ACA, be repealed. 91 Requirements for meeting MLR vary, but adjustments are available based on the number of lives covered or an insurer’s special circumstances. 92 Even with these special allowances, the need for sufficient scale to comply with MLR standards is likely to impede start-up providers, while the limitations on administration costs as a percentage of revenues will likely encourage further consolidation in an attempt to reduce administrative costs and increase profits. 93 Many large insurers are already meeting MLR limits, leaving room for price increases regardless of regulation. 94
II. THE PRACTICAL IMPLICATIONS OF INSURANCE MERGERS
Insurance company CEOs tout the benefits of the proposed mergers, claiming the transactions will allow insurers to “deliver an acceleration of innovative and affordable health and protection solutions” 95 and capture large
90. Letter from the Am. Hospital Ass’n, to The Honorable William Baer (Aug. 5, 2015), http://www.aha.org/advocacy-issues/letter/2015/150805-let-acquisitions.pdf [hereinafter AHA Letter to DOJ] (noting the AHA’s letter to DOJ regarding concerns and analysis on proposed mergers). 91. Dafny, supra note 22. 92. KAISER FAM. FOUND., supra note 82. An insurer’s medical loss ratio may be difficult to estimate given that the ACA has changed an insurance company’s traditional population pool by mandating acceptance of individuals with pre-existing conditions. See ObamaCare Affects Health Insurance, supra note 78; see also Mathews, supra note 76. An insurer’s population pool will likely encompass a “sicker population,” making the pool of policy- holders more expensive to insure. Jason Leopold, Documents Reveal Anthem Blue Cross Manipulated Data to Justify Massive Rate Hike, TRUTHOUT (Feb. 25, 2010, 6: 37 PM), http://truth-out.org/archive/component/k2/item/88224:documents-reveal-anthem-blue-cross- manipulated-data-to-justify-massive-rate-hike. When an insurance company is forced to provide more funds to care for policy-holders, its medical loss ratio will increase. Id. “Even if premium increases generate more revenue for a particular plan, if the pool of policyholders for that plan becomes more expensive to insure, the medical loss ratio will appear higher.” Id. 93. Pope, supra note 30; see Mathews, supra note 76 (noting that many small insurance startups were forced to shut down because of the ACA’s implications and requirements on insurance companies to provide Americans access to, but also low-costing, health insurance, but larger health insurers were also to survive). 94. Dafny, supra note 22 (stating that “[a] recent study reports national MLRs for 2013 were 86 percent, 84 percent, and 89 percent for the individual, small-group, and large-group markets, respectively. These findings suggest there may be substantial room for profitable merger-related price increases in the individual market in particular, notwithstanding the minimum MLR”). 95. About the Transaction, ANTHEM, INC., http://betterhealthcaretogether.com/about-the- transaction/ (last visited Mar. 15, 2016).