PREMIUMS GOING UP ? WHAT IS MEDICAL LOSS RATIO

MEDICAL LOSS RATIO  (MLR) measures the percentage of health insurance premium dollars an insurer spends on medical claims and quality improvement rather than administrative costs and profits.

Each type of insurance has a % legislated by the Feds or the States which is required for the insurance company to spend on patient care and the remainder is then spent on administrative cost, salaries, advertising, overhead  and profit.  

The ACA requires health insurance carriers to spend the bulk of the premiums they collect on medical expenses for their insureds. Individual and small-group carriers must spend at least 80% of premiums on medical expenses, and for large-group plans, the requirement is 85%..

If they collect too much - the consumer gets a rebate - if they collect too little, premiums rise the next year to make up for the current year and with an added amount to cover the current year.

The ACA imposes a medical loss ratio requirement of 85% on Medicare Advantage plans, but rebates are sent to the Centers for Medicare and Medicaid Services instead of to consumers. States can also set MLR requirements of at least 85% for Medicaid/CHIP managed care contracts, and most of them do (37 of the 41 states that use Medicaid managed care)

For Medicare Supplemental plans, better known as Medigap plans, states approved their rates based on this MLR but the % they are required to spend is a bit lower.  For individual plans, the MLR is 65% and for group plans like one may get for a retiree plan, it is 75%.

So that means 

1.  Individual Medigap Policies: Must maintain a minimum MLR of 65%. This means insurers must spend at least 65 cents of every premium dollar on patient medical claims and quality improvements. 
2. Group Medigap Policies: Must maintain a minimum MLR of 75%. Group plans carry a higher required loss ratio because administrative costs are typically lower across larger pools

State insurance departments enforce these federal baseline percentages, following the National Association of Insurance Commissioners (NAIC) model regulations - the insurance company submits their figures for rates for the coming year to the states based on this model.

So you see there is little that an association like AARP could do which would have anything to do with these rates especially for Medigap plans (Medicare Supplemental plans) because the nature of this type of insurance is to pay what Medicare does not pay - the insurer has little to say even about what they pay in this regards.