Medical Cost Ratio

Dictionary Says

Definition of 'Medical Cost Ratio'


A comparison of a health insurance company's healthcare costs to its premium revenues. The medical cost ratio is one indicator of the insurer's financial health. Health insurance companies, like other types of insurers, are for-profit companies and must remain profitable to stay in business.

Investopedia Says

Investopedia explains 'Medical Cost Ratio'


For most major health insurance companies, a medical cost ratio of 85% or less is desirable. An 85% medical cost ratio means that a health insurer spends 85% of the premium dollars it receives on healthcare, leaving 15% for profit and non-medical costs such as administrative expenses, payroll, overhead and advertising.

comments powered by Disqus
Hot Definitions
  1. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  2. Valuation

    The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective.
  3. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  4. Tech Street

    A term used in the financial markets and the press to refer to the technology sector. Companies like Intel, Microsoft, Apple and Dell are all considered to be part of Tech Street.
  5. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
  6. Momentum Investing

    An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.
Trading Center