Reform Update: Facing ACA Mandates, Insurers Diversify Into Technology

Health insurance companies, now required to spend the lion's share of premium revenue on patient care, are looking for higher investment returns elsewhere. As a result, they're increasingly putting money into technology ventures where they expect to realize higher returns.

, now required to spend the lion's share of premium revenue on patient care, are looking for higher investment returns elsewhere. As a result, they're increasingly putting money into technology ventures where they expect to realize higher returns.

Health insurance companies

The medical-loss ratio standard under the

requires insurers to spend at least 80% of what they earn from premiums on patient care and related quality improvements. No more than 20% can be used for administrative, marketing and business expenses. The requirement is as high as 85% for large group plans.

Patient Protection and Affordable Care Act

Tied to that, insurers are trying to maximize their investment returns while also investing in businesses that are exempt from the 80/20 rule. Technology operations check off both those boxes for them.

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Source: ModernHealthcare