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Obamacare brings more insurance rebates

As part of health care reform, if insurers fail to spend the bulk of your premium directly on your medical care, they must pay you back. Will you get a check next month?

By Smart Spending Editor Jul 23, 2013 6:47PM
This post comes from Jay MacDonald at partner site Bankrate.com

MSN Money partnerFor the second summer in a row, some individuals and employers are getting money back from health insurance companies.

Image: Insurance Money (© Comstock Images/Jupiterimages)The Department of Health and Human Services says consumers and businesses will receive about $500 million in premium rebates from insurers that have failed to meet federal health care reform standards designed to purge excessive administrative costs and profit-taking from America's health plans.

That's roughly half of the $1.1 billion refunded to nearly 13 million policyholders in 2012, at an average rebate per family of $151. This year's rebates will go to 8.5 million insurance customers and average about $100 per family.

An Obamacare standard, known as the "medical loss ratio," or MLR, requires an insurer to spend at least 80% of your premium directly on your medical care if you purchased your own policy, or 85% if you're insured under an employer's plan.

"Now, many insurance companies are already exceeding this target, and they're bringing down premiums and providing better value to their customers," President Barack Obama said during a recent event at the White House. "But those that aren't now actually have to reimburse you. If they're not spending your premium dollars on your health care ... they've got to give you some money back."

Annual rounds of health care insurance rebates must be issued by Aug. 1; this will be the second year for the program.

The fact that rebates will be lower this year is actually good news for consumers, according to analysts with the nonpartisan Kaiser Family Foundation.

"Smaller rebates ... are not an indication that consumers are now saving less money as a result of the MLR provision, but rather that insurers are coming closer to meeting the ACA's MLR requirements and that this provision is having its intended effect of consumers getting more value for the money they spend on premiums," the analysts said in a June report.

Large employers tend to receive the most rebates, mainly because that's the way most people are covered by private health insurance," says Cynthia Cox, policy analyst for Kaiser's Program for the Study of Health Reform and Private Insurance. "If you look at it per person, those who buy insurance on their own can expect some of the highest rebates," she says.


Rebate would buy a few fill-ups

According to data compiled by Kaiser, the states with the highest average rebates per family last year were Washington ($512), Delaware ($495), Massachusetts ($457), Minnesota ($303) and Wyoming ($284). States with the most rebate recipients in 2012 included California (1.4 million), Texas (726,000), New York (634,000) and Florida (614,000).

If you're owed a rebate, your insurance company is required to pay by Aug. 1. Under health care reform, a rebate may be paid by check; as a credit or debit reimbursement, if premiums were paid that way; as a credit toward your next premium; or as a reduction for employers to distribute to workers covered via an employer health plan.

Insurers are no fans of rebates

While consumers immediately embraced the rebates, the thrill of receiving cash in hand tells only half the story. Kaiser estimates that, had the MLR program failed to convince insurers to rein in their costs beginning in 2010, premiums would have been $856 million higher in 2011 and $1.9 billion higher in 2012.

Health insurers, however, are far from thrilled with the rebate program, according to Robert Zirkelbach, spokesman for America's Health Insurance Plans, an industry trade group.

"MLR is the absolute wrong way to get health care costs under control," he says. "Instead of focusing on what the data shows is the real driver of rising health insurance premiums, which is underlying medical costs, it is capping health plan administrative costs, which have been consistent for about the last decade."
But Deborah Chollet, a senior fellow at Mathematica Policy Research in Washington, D.C., who is helping states set up their new health insurance exchanges, says the MLR program and its insurance rebates were designed to put the onus on insurers to renegotiate rates with doctors, hospitals and other service providers to lower health care costs.

"I think what (the Department of Health and Human Services) is saying is: 'This shouldn't be the consumer's problem, it should be the insurance company's problem,'" she says. "Their much-lauded nimbleness needs to come into play now."

More from Bankrate.com:


252Comments
Jul 23, 2013 11:53PM
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EXEMPY Americans from Obamacare. Make all the politicians have to have Obamacare and see how fast they veto it.
Jul 23, 2013 7:16PM
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And rates went up by $500.  Nice fuzzy math brought to you by MSNBC......
Jul 23, 2013 7:56PM
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I've said it before and at the risk of being redundant will say it again.. can't wait until tax time of the year following full inplementation of O-care.  When the folks who voted for him have to shell out some of their money to pay  taxes instead of getting a little back they"re going to be pissed lol. 
Jul 23, 2013 7:04PM
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REBATES? WHAT A FING SCAM! THE FEW DOLLARS YOU GET IS TO FING BRAINWASH

YOU INTO THIS BEING A GOOD THING! IT'S A PAYOFF TO SHUT YOU UP TILL THIS TRAIN

WRECK CALL OBAMACARE HAS TAKEN OVER WITH SINGLE PAYER HEALTHCARE!  DOPES!

WHY DO BIG UNIONS, AARP AND DEMOCRATS WHO SUPPORTED IT BAILING OUT NOW?

Jul 23, 2013 11:20PM
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three quick points on why the aca will only run for several months (if its launched at all):  

 

(1) the govt wants to control healthcare -- BUT -- they can't even run a successful
     business because of careless organization, poor planning, lack of innovation, and delusive
     customer service (ex: us postal service, dept of motor vehicles, law enforcement, etc).  medicare
     and social security are perfect examples of just how ineffective and UNTRUSTWORTHY our
     govt can be.  

(2) the govt says they'll control costs -- BUT -- they won't even come close.  they have never even
     acknowledged the predominant factor behind the increasing healthcare costs ... LAW SUITS. 
     they just turn their heads as BILLIONS are awarded each year.  medical malpractice law suits 
     have become such a regular occurrence that they are now considered as a normal component of
     the medical industry's business environment.  healthcare companies (i.e. hospitals, clinics, drs
     offices, insurance, emergency services, etc) have to account for law suits as a recurring
     business expense -- an actual forecasted variable cost included in their ANNUAL budget plan. 

(3) this healthcare law is supposed to be completely funded by various taxes, penalties, and
     fees -- BUT -- the REAL cost for this healthcare law (start-up, implementation, and running) will 
     annihilate the so-called "fund".  to say that the administration used embellished figures to gain
     support of their bill would be an understatement (private accounting firms and universities 
     have claimed them "inaccurate").  this is MISREPRESENTATION at its very best. 

 

 

now, lets look at this debacle from a "common sense" point of view (for argument's sake, let's assume the aca is launched next year) ...  

 

the majority of the insured us public have some sort of hmo or hmo-based insurance. those of you that now have or have previously-experienc​ed hmo insurance should be able to decipher this rather easily. 

(1) how many DAYS/WEEKS/MONTHS does it take to see a doctor/specialist from the time you
     called for the appointment? 

(2) now, how long do you think the same appointment will take when the expected 32 million newly
     "insured" americans JUSTIFIABLY want to exercise their new healthcare and begin seeing
     doctors? 

(3) it's not like we have an overabundance of unemployed doctors.  HOW is the current "supply"
     of physicians supposed to handle the onslaught of new patients?   answer:  it CAN'T. 

     what EFFECT will this law have on the QUALITY of healthcare provided?   answer:  it will have a
     profound effect -- as quantities increase, quality will DIMINISH. 

 

please don't get me wrong ... i would love for every human being to have access to proper healthcare.  but, from a realistic point of view, there is NO conceivable WAY that this healthcare act is ever going to work.  it is (in and of itself, and yet, in so many different ways) FLAWED and completely UNSUSTAINABLE

 

 

it seems quite obvious that the aca bill was written and sold under false pretenses.  worse yet, i simply do NOT understand how this bill actually made it through both houses as well as the supreme court in order for it to go into LAW ... the popular "no one read the entire bill" answer is, in the purest sense of the word, UNACCEPTABLE

 

i don't like saying this, but, i'm COMPLETELY disappointed in our govt

 

 

 

.

Jul 23, 2013 9:17PM
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This is not and can not be a good deal for YOU! I have learned when Obama walks out and grins and tell you this is a great deal you better grab your A$$ with both hands and start running because something is going to be painful... Gosh will I ever be glad for America when this **** is gone for good. 
Jul 23, 2013 11:47PM
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The insurance companies raise your rates $500 and then give you a $50 rebate. Thats a net loss of $450. Gotta love it.
Jul 23, 2013 7:19PM
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What about the penalties for abusing health insurance? 
Jul 23, 2013 8:15PM
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Some will just never get it. Health insurers have been "ripping ypu off" for years. Raise premiums, deny insurance benefits, recission insured for ludicrous reasons. Hey, that must be the "American way". Idiots.
Jul 23, 2013 7:24PM
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does this apply to medicare?     no? why not.     i paid for it and have not used it.  
Jul 23, 2013 7:10PM
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Rebates?  What a joke.  Who's making interest off of that money, Obamaville?
Jul 23, 2013 10:58PM
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The part of this everyone seems to be missing is that for decades the insurance companies have said "If everyone was signed up rates WILL GO DOWN!"  Now that this is going into effect and everyone is supposed to get signed up they are SHOUTING RATES ARE GOING UP!  WTF?
Jul 23, 2013 8:53PM
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It does seem that if insurance companies pay more to doctors, they can raise rates and keep more for themselves.  Of course, this is exactly what was going on before Obamacare.
Jul 23, 2013 11:06PM
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I was born with a hart issue that caused me to have surgery at age 28.  This has been considered a preexisting condition and I have been denied health insurance or coverage on my heart condition. Now I have always managed to get health insurance either on my own or if I was lucky enough to work for a company that provided coverage. However on individual coverage I would not be covered for my hart condition for a year after taking a policy or depending on the insurance not covered at all. According to what I know about Obama Care this will do away with the persisting condition clause. After my hart surgery when I was 28 the insurance at that time denied some of the claims.  I had to go to the main office to meet with the insurance company to go over my bills.  This was in 1993 that I had this surgery. Anyway I arrived at the Blue Cross office and as I walked through the parking lot I passed by the executive parking lot.  I never seen so many expensive foreign cars in one place in all my life other then a car dealership. When I went into the building I was invited into a conference room. The conference table was made of granite and shaped like a triangle.  The conference chairs were high back leather chairs. Well they had the director of blue cross from another location on video conference. Now this was 1993 and the video screen was very large and a flat screen much like the flat screen tvs that most everyone has in their homes today. But in 1993 this was  a head of its time and must have been very expensive. There was no delay in this tv screen. The director looked right at me and said and I quote. "by law we do not have to pay any of your medical bills."  So I ended up paying thousands out of pocket.  Because I believe in personal responsibility I paid my bills. The state of VA knew about this law, demarcates, republican's

liberals and independents and no one did nothing about it.  You always hear let the states handle it, well the state ignored it and I'm sure other states ignored it too so Obama did something about it.

Health Care should be a moral issue. The health of our citizens should be a priority. After all in the bible Jesus healed people and yet he never asked for payment or a health care card.

Jul 23, 2013 7:38PM
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Along with all the other Obamacare missteps, this part of the law ignores the basic purpose of insurance. The premiums are paid by everyone in the group so that the group members can all be cared for. If my company may spend less on me than I contribute, but they're spending more on someone else. The average costs of premiums and expenditures are thus balanced. And I doubt there's a lot of surplus money around when you consider the whole group.

 

More nonsense from the folks who are claiming premiums will be less expensive next year.

Jul 23, 2013 10:11PM
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"and the farmer hauled another load away".

Jul 24, 2013 10:25AM
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As a business owner myself  all that is going to happen is workers will be laid off and hours will be cut, the minimum plans will be tolerated but the other tax loop holes will hardly even come close to off set the cost increase I will be hit with.

 

I decided that to keep my books the same as they had been before Obamas business tax assault,  I needed to lay off workers,  so I started with my employees that had Obama bumper stickers on their cars.   They can all thank him for being unemployed now

Jul 24, 2013 6:25AM
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You don't have to pay any thing if your here ILLEGAL

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