The Centers for Medicare & Medicaid Services (CMS) released a new report today showing that consumers have received more than $2.4 billion premium rebates since 2011 because the Affordable Care Act requires that health insurance companies spend at least 80 percent of premium dollars on health care. For 2014 alone, over 5.5 million consumers received nearly $470 million in rebates, for an average of $129 per family. Those rebates are in addition to improvements in quality and affordability savings consumers have received as the share of insurance companies in compliance with the requirements has increased.
“Thanks to the Affordable Care Act, there are now programs in place to give consumers maximum value for their premium dollar,” said Kevin Counihan, CEO of the Health Insurance Marketplace. “We are pleased that the tools created under the health care law are working as intended to give consumers access to high-quality health insurance coverage and keep cost affordable.”
The Medical Loss Ratio (MLR) rule, also known as the 80/20 rule, is one of the tools created through the Affordable Care Act to keep costs affordable for consumers. This rule requires that issuers in the individual and small group markets spend at least 80 percent of premium dollars on health care and activities that improve the quality of health care, rather than on things like overhead. In the large group market, issuers are required to spend at least 85 percent of premium dollars in this manner. Insurance companies that fail to meet this standard owe consumers a refund in the form of lower premiums or a check.
Today’s results show that an increasing number of consumers are in plans where they are receiving more value for their premium dollars up front because their premium rates were set to reasonably reflect insurers’ spending on medical care and quality improvement activities. The number of consumers in plans that owe refunds decreased by more than one million in 2014, from approximately 6.8 in 2013 to 5.5 million in 2014.
Today’s report covers rebates paid for the 2014 plan year, which represents the first full year of implementation of a number of Affordable Care Act reforms. In 2014, issuers saw a substantial influx of previously uninsured consumers into health insurance markets as insurance reforms; financial assistance, and premium stabilization programs took effect.
Consumers who are owed a rebate for 2014 should have received a notice from their issuer by October 30, 2015.
To read today’s Medical Loss Ratio report, visit: https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/2014_Medical_Loss_Ratio_Report.pdf.
For more information on 2014 MLRs and refunds by state, visit: https://www.cms.gov/CCIIO/Resources/Data-Resources/Downloads/2014_MLR_Refunds_by_State.pdf.
Open enrollment in the Health Insurance Marketplaces runs until January 31, 2016. Plans for 2016 are affordable more than 7 in 10 current Marketplace enrollees will be able to find plans for $75 a month in premiums or less.