I don't think the ACA's MLR rule is keeping insurers honest the way people think it is. I think it's mostly teaching them where the line is — and how to stay just inside it while premiums keep climbing.

Here's the Simple Version

The ACA says health insurers have to spend a certain share of premium dollars on care. In the individual and small-group markets, that number is 80%. In the large-group market, it is 85%. Sounds reasonable enough.

But that is not a profit cap.

That is the part people keep missing.

If premiums go up, the amount left over can still be massive. So yes, insurers can follow the rule and still make a lot of money. That is not a contradiction. That is the design.

And the numbers make that pretty hard to ignore. UnitedHealth, Cigna, Elevance, and CVS Health are still making billions. Not millions. Billions. That is not a business gasping for air. That is a business doing exactly what big, mature, well-protected businesses do: collect a lot, keep a lot, and call it compliance.

The MLR rule was never built to stop the whole machine. It was built to regulate one piece of it.

The rule stays technically satisfied, and the consumer keeps paying more. That's the game.

That's Why Vertical Integration Matters So Much

The insurance side can stay inside the ratio, but the rest of the business can still pull profit from pharmacy, care delivery, provider assets, and services. So when people ask why premiums keep rising so fast, I think part of the answer is right there. The money keeps flowing in, the rule stays technically satisfied, and the consumer keeps paying more.

That's the game.

And sure, rebates exist. But rebates are not a solution. They are a refund after the fact. They do not stop the pricing power, and they do not stop the system from getting more expensive year after year.

My Take

We were sold the idea that MLR would put a lid on insurer behavior. It did not. It put a boundary around one part of the business, while the biggest players found ways to grow around it.

That is why premiums keep rising.

And if people thought last year was bad... I'm not convinced the next one is going to be better.

— Tess