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Abstract
Starting in 2011, the Patient Protection and Affordable Care Act requires individual and small-group insurers to spend at least 80 percent - and large group insurers to spend at least 85 percent - of their premium dollars on medical care and on efforts to improve the quality of care. To assess the effect of the reform on the health-insurance industry's earnings, the Weiss study covered 543 health insurers, distinguishing insurers that were and were not in compliance in 2009 with the new minimum loss-ratio requirements: 226 companies spent less than 85 percent of their premiums on medical expenses; and 317 companies already spent 85 percent or more of their premiums on medical expenses. Although the health care reform bill is expected to deliver significant benefits to consumers, Congress and state insurance commissioners should keep a watchful eye on the overall financial health of the industry, while consumers should be especially careful to do business with companies that have the wherewithal to promptly pay claims despite increased costs, Mr. Weiss cautioned.