The law says that no more than 20% of payments from consumers can be used to pay for administrative costs. So it puts a cap on what insurance companies can pay in regards to salaries from revenue brought in by premiums.
So in a bad year, an insurance company can, for instance, go 90/10 in regards to how much of its premiums are used to pay for administrative costs in order to pay for coverage. What the law limits, however, is, during good years, an insurance company using 70/30 of premium payments to be used to pay for administrative costs.
So the 80/20 ratio is a cap, not a constant, and insurance companies can use more of the money from premiums to pay out for coverage but not less.