Using the Medical Loss Ratio to Incentivize the Adoption of Innovative Medical Technology

Thomas P. Hayden · 17 Vand. J. Ent. & Tech. 239


A persistent problem in the US health care system relates to the strange position of technology. Patients demand the cutting-edge, and doctors strive to provide it, but new technology is the single greatest source of cost increases in a country where the cost of health care is already astronomical. Because of this cost, the rate of actual adoption of technology is relatively low. This Note’s solution is to rewrite the Medical Loss Ratio (MLR) rules to mitigate cost increases and introduce better technology to a health care system that demands it. The MLR allows insurers to keep only a small portion of the premiums they take in; the rest must be spent on health care, quality improvements, or else be rebated back to the customer. Creating an Elastic MLR and more lenient quality improvement definitions would allow insurance companies to keep more of their premiums in exchange for higher investment in quality improvements related to technology.