Before the Affordable Car Act, insurance companies spent a large percentage of consumers’ premiums on non-medical costs (called the medical loss ratio) such as high pay for management, administrative costs, marketing and of course profits for shareholders. However, now with the implementation of the health care reform these companies are required to devote at least 80% of those premium dollars to customers’ health care. If this does not occur then the difference is returned to individual in the form of premium discounts or rebate checks beginning this year. According to the Kaiser Family Foundation study reported below those rebates will total ~ $1.3 billion dollars. One has to wonder, how many of those recipients were rooting for the Supreme Court to throw the law out.
(Reuters) – Health insurers will pay $1.3 billion in rebates to consumers and employers this year under a provision of President Barack Obama’s healthcare reform law that penalizes plans that devote too little of their premium revenues to health services, an independent study showed on Thursday.
The study, published by the nonpartisan Kaiser Family Foundation, said the data illustrated some of the tangible benefits that consumers and employers could expect from the embattled 2010 law if it survives two major legal and political election-year challenges.
The rebates, which are due by August 1, stem from premiums paid in 2011 on plans representing nearly 16 million beneficiaries. But Kaiser, a nonprofit healthcare research group, said most of the money is expected to go to employers rather than consumers.
If the law were overturned or repealed, insurers would no longer be required to comply with the rebate provision.
“While the health reform law as a whole continues to divide the American public, there are tangible changes taking place that benefit consumers,” said Kaiser President Drew Altman.
“Greater regulatory scrutiny of private insurance is improving value and helping to get excess costs out of the system,” he added.
Kaiser found that some of the biggest rebate payouts are expected in states, including Texas and Florida, where the law faces some of its stiffest opposition from Republican politicians and other conservatives.