Health Insurers' Operations in the Face of Health Care Reform: An Analysis of the Supplemental Health Care Exhibit

Abstract

The Patient Protection and Affordable Care Act (ACA) introduced significant changes to the health insurance marketplace in the United States. The act also imposed reporting requirements on insurers. The law has required insurers since 2010 to file yearly the Supplemental Health Care Exhibit (SHCE). The SHCE provides unique information on how health insurers operate. We analyze data in the SCHE to understand how insurers have complied with one of the major new regulations affecting health insurers' operations arising from the ACA—the Medical Loss Ratio (MLR) Provision. This requires that insurers spend a minimum percentage of their premium revenue on medical claims, quality improvement expenses, and deductible fraud and abuse detection and recovery expenses. Our analysis of the 2010–2017 SHCE indicates that insurers' underwriting performance worsened in the early years of the ACA as they worked to increase MLRs to become ACA‐compliant. Analysis of the SHCE further reveals that insurers' profits from managing uninsured plans grew as the profitability of underwriting insured plans decreased. Future research on health insurer operations is warranted. The currently underutilized and data‐rich SHCE provides unique information that makes future research possible.