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KFF: Insurers To Issue $1.3B in Medical-Loss Ratio Rebates This Year

Health insurers are expected to issue about $1.3 billion in rebates this year because of the medical-loss ratio rule under the federal health reform law, according to a Kaiser Family Foundation report released on Thursday, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 4/26).

The report found that at least 486 health plans covering 15.8 million U.S. residents will issue rebates. Researchers noted that number likely will be higher because data for California were not included (Aizenman, Washington Post, 4/26).

The analysis found that:

  • About 31% of individual policyholders, or 3.4 million people, will receive an average rebate of $127;
  • About 28% of small businesses will receive an average of $76 per enrollee in rebates; and
  • About 19% of large employers will receive an average of $72 per enrollee in rebates (Wilde Mathews, Wall Street Journal, 4/26).

Wide Variation Between States on Rebates

The report found wide variation between states in the average amount of rebates, because of local market factors and different state regulations.

For example, about 92% of individual policyholders in Texas will receive rebates, while less than 1% of such individuals in Vermont, Rhode Island and Iowa will receive rebates. Alaska will have the highest average rebate per enrollee in individual plans at $304.99, while residents in New Mexico and Vermont will receive an average rebate of about $1.

Report Based on Preliminary Data; More Exact Figures Coming by June

KFF developed the report based on an analysis of preliminary data that insurers recently submitted to state regulators, the Post reports (Washington Post, 4/26).

More exact figures will be available by June, when insurers must divulge to the federal government the exact amount of the rebates. The rebates are expected to be issued by August. Enrollees in individual plans may receive the rebates in the form of checks or discounts against future premiums (Wall Street Journal, 4/26). Rebates for group plans will go to the employer, which can choose whether to pass them on to employees (Washington Post, 4/26).

Separate Report Breaks Down Insurers' Shares

A separate Goldman Sachs report projects that insurers will pay rebates totaling $1.2 billion, the AP/Boston Globe reports. The report estimates that:

  • UnitedHealth will pay $307 million;
  • Aetna will pay $177 million;
  • WellPoint will pay $94 million; and
  • Coventry will pay $50 million.

Reaction

The Obama administration praised the findings of the KFF report, citing them as evidence of the benefits of the federal health reform law, the AP/Globe reports.

Likewise, Sen. Jay Rockefeller (D-W.Va.) said, "Millions are benefitting because health insurance companies are spending less money on executive salaries and administrative costs and more on patient care" (Alonso-Zaldivar, AP/Boston Globe, 4/26).

Meanwhile, America's Health Insurance Plans in a statement said the rule will cause coverage disruptions that "are likely to outweigh any benefits these rebates will provide to consumers" (Washington Post, 4/26). The "new medical loss-ratio requirement ... does nothing to address the real driver of premium increases," AHIP spokesperson Robert Zirkelbach said (Levey, Los Angeles Times, 4/27).

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
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