By requiring a minimum medical loss ratio, an insurance company provides greater value to its policyholders when:

The concept of a minimum medical loss ratio (MLR) directly relates to how health insurance companies allocate premiums collected from policyholders. A higher percentage of premiums used for healthcare costs translates to a greater value for policyholders because it ensures that more of their premium dollars are being invested in actual medical care and services, rather than being spent on administrative costs or profit margins.

When an insurance company must adhere to a minimum MLR, it is mandated to use a significant portion of the premium revenue for medical claims. This regulation is designed to protect consumers by ensuring that a certain percentage of their premium dollars directly contributes to healthcare services. Therefore, when a higher percentage of premiums is allocated to healthcare costs, policyholders receive tangible benefits in terms of access to necessary medical services, which enhances the overall value of their insurance plan. This alignment of resources with medical need supports the goal of providing more efficient and effective healthcare coverage to individuals.

In contrast, a lower percentage of administrative expenses or timely claims processing, while important aspects of a well-functioning insurance company, do not directly speak to the value delivered to policyholders in terms of healthcare access and quality. Likewise, profits exceeding healthcare costs do not guarantee that policyholders are receiving optimal care; rather, they may indicate a