What is the 80/20 rule in the context of health insurance?

The 80/20 rule in the context of health insurance refers to the requirement that at least 80% of premiums collected by health insurance companies must be spent on healthcare services rather than on administrative costs or profits. This rule is part of the Affordable Care Act and aims to ensure that consumers receive value for their premiums, promoting transparency and accountability within the insurance industry. By mandating that a significant majority of funds be directed towards patient care, this rule helps to encourage insurance companies to focus on improving the quality of care and managing costs effectively for their members. This principle is designed to protect consumers and ensure that a substantial portion of their premium payments contributes directly to their healthcare needs.