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March 22, 2018
Great Article on Affordable Care Act & Rebates from AFL-CIO
Posted On: Feb 21, 2012

Great Article on Affordable Care Act & Rebates from AFL-CIO....

Affordable Care Act Means Premium Rebates for Consumers

by Mike Hall, Feb 20, 2012

One of the Affordable Care Act’s most important consumer protection provisions requires health insurers to spend at least 80 percent of premium dollars on actual medical care, not wasteful administration, marketing or executive pay and bonuses. The health care reform law requires insurers that do not meet the 80 percent threshold (also known as the medical loss ratio) to provide rebates to their customers.

The Department of Health and Human Services (HHS) says consumers should receive those rebates later this year. HHS denied the requests by some insurance companies to be allowed to spend more on “overhead” rather than health care, a move that saved health care consumers more than $323 million in rebates. Says HHS Secretary Kathleen Sebelius:

Before the Affordable Care Act, insurance companies could spend your premium dollars on administrative red tape and marketing. With today’s notice, we’re taking a big step toward making insurers accountable to consumers. Some of these insurance companies have already changed their behavior by lowering premiums or spending more on medical care and quality improvement, while the remainder will need to refund this money to their customers this year.

Overall, says Ethan Rome, executive director of Health for America Now (HCAN), insurance companies will refund more than $2 billion this year as the result of the law.

The 80/20 standard is one of the most effective consumer protections in the health care law and is already reducing premiums for individuals and small businesses. Step by step, this law is taking insurance companies out of the driver’s seat and giving consumers control over their health care.

Insurers will be required to make the first round of rebates to consumers by August based on their 2011 medical loss ratio. For more information on the medical loss ratios, click here.

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