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Insurers to pay half as much in rebates this year

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By Reuters
Thursday, June 20, 2013, 7:48 p.m.
 

U.S. insurers will pay $500 million in rebates to employers and individuals this summer because of President Obama's health care law, about half the amount they paid last year.

The Affordable Care Act requires companies to refund customers when they spend less than 80 percent of premiums they collect on medical care.

The Department of Health and Human Services attributed the decline in rebates to insurers' adhering more to this requirement and to lowering premium rates for their products.

The government agency said Thursday that 8.5 million insurance customers would receive an average rebate of about $100 per family after August 1. For 2011, 4.1 million people received about $152 per family.

The law goes into full effect on Jan. 1, 2014, when an expansion of the Medicaid health plan for the poor and subsidized state health exchanges take hold. In recent weeks, states have begun publishing premiums for new insurance products for those exchanges.

The Medical Loss Ratio, or MLR, portion of the law was first applied in full in 2011 and limits spending on administrative costs, salaries and bonuses.

Gary Cohen, deputy administrator at the Centers for Medicare and Medicaid Services, said insurers were paying fewer rebates in 2012 than in 2011 because they were more strictly following the law and charging lower premiums.

The centers also said the MLR rule, a new review process that requires rate increases of more than 10 percent to be reviewed, and competition contributed to a savings of $3.4 billion among 77.8 million people because of lower spending on premiums last year.

Cohen said other market forces could be contributing to the lower premiums. Growth in health care spending has slowed during recent years as consumers have cut back on doctors' services, and the trend is forecast to continue.

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