The ratio of medical care costs to premium revenue net of premium tax (the medical care ratio, or MCR) decreased approximately 450 basis points between the third and fourth quarter of 2012.
The Company has changed its method of calculating the medical care ratio effective with the release of its fourth quarter earnings.
The Company's consolidated medical care ratio decreased 450 basis points to 86.
The company's medical care ratio
- a percentage of premium dollars spent on health care costs - was 83.
The medical care ratio of the Texas health plan was 90% in the third quarter of 2012 compared with 109% in the second quarter of 2012 and 94% in the third quarter of 2011.
The medical care ratio at the California health plan increased to 96% in the third quarter of 2012 from 89% in the third quarter of 2011.
Excluding the Texas, Missouri, and Wisconsin health plans, the Company's overall medical care ratio was 85.
The following table captures the effect of prior period development and the premium deficiency reserve on the Texas health plan's medical care ratio and medical care costs for the quarter ended June 30, 2012:
The ratio of medical care costs to premium revenue (the medical care ratio, or MCR) was essentially flat, increasing to 84.
The medical care ratio of the Florida health plan decreased to 89.
Medical care costs as a percentage of premium revenue (the medical care ratio
, or MCR) was 84.
The continuing mix shift from larger to smaller groups, from higher cost to lower cost geographies, and from full network products to more efficient products with lower medical care ratios
, is expected to account for approximately 90 basis points of the difference.