This and the cap on the profit margin[1]. The logic in this case is even more bizarre. A regular company can increase its profit either by raising prices or by

This and the cap on the profit margin[1]. The logic in this case is even more bizarre. A regular company can increase its profit either by raising prices or by reducing costs so it strives to do both. An health insurance firm can only do the former. If an insurance firm were to reduce its costs then it would have been forced to reduce the price to remain within the profit margin. But if it increased them instead then it could raise price and get more money in the same profit margin. [1] https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Medical-Loss-Ratio https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-In...