Under the Affordable Care Act, the proportion of premium revenues spent on clinical services and quality improvements is called which term?

• A. Medical loss ratio
• B. Minimum essential coverage
• C. Issue rebate
• D. Market rate reform

Answer: (A)

Medical loss ratio is the share of premium revenues that goes toward clinical services and quality improvements rather than administrative costs or profit. Under the ACA, insurers must spend a minimum portion of premium on care—80% for individual and small-group plans, 85% for large-group plans. If they don’t meet this threshold, they must issue rebates to enrollees. The other options refer to different ACA concepts: minimum essential coverage is the required level of coverage, issue rebate is the payout issued when MLR thresholds aren’t met, and market rate reform concerns how premiums are regulated.