Health insurers' operations in the face of health care reform: An analysis of the Supplemental Health Care Exhibit

• Published date: 01 September 2020
• DOI: http://doi.org/10.1111/rmir.12154
• Date: 01 September 2020

Risk Manag Insur Rev. 2020;23:277–286. wileyonlinelibrary.com/journal/rmir

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277

Received: 11 November 2019

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Accepted: 4 August 2020

DOI: 10.1111/rmir.12154

DATA INSIGHT

Health insurers' operations in the face of

health care reform: An analysis of the

Supplemental Health Care Exhibit

Yu Lei

1

|Mark J. Browne

2

1

Department of Economics, Finance and

Insurance, Barney School of Business,

University of Hartford, West Hartford,

Connecticut

2

School of Risk Management, Tobin

College of Business, St. John's University,

New York, New York

Correspondence

Yu Lei, Barney School of Business,

University of Hartford, 200 Bloomfield

Ave., West Hartford, CT 06117.

Email: lei@hartford.edu

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 re-

quired insurers since 2010 to file yearly the Supple-

mental 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) Provi-

sion.Thisrequiresthatinsurersspendaminimum

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

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