Health Insurers To Pay $1.1B in Medical-Loss Ratio Rebates, HHS Says

U.S. health insurers will distribute about $1.1 billion in rebates to 12.8 million U.S. residents because of the medical-loss ratio requirement in the federal health reform law, according to a report released Wednesday by HHS, the Washington Post reports.

The report found that the rebates will average $151 per household (Kliff, Washington Post, 6/20).

Background

Under the overhaul's MLR rule, private insurers must spend at least 80% in the individual market or 85% in the group market of premium dollars on direct medical costs.

Insurers that do not comply with the ratio must issue rebates to consumers. Accompanying letters from the insurers must state in the first paragraph that the funds are part of the health reform law (California Healthline, 5/14).

Report Details

The latest figures vary from earlier estimates from the Kaiser Family Foundation (Washington Post, 6/20).

A KFF report released in April estimated that health insurers would issue about $1.3 billion in rebates, but noted that figure likely would be higher because it did not factor in data from California (California Healthline, 4/27).

Rebates Might Not Be Disbursed

The rebates might never be distributed if the Supreme Court overturns the health reform law, the Post reports.

Tim Jost, a law professor at Washington and Lee University, said, "If [the Supreme Court] says the law is unconstitutional, insurers couldn't be forced to pay rebates based on unconstitutional laws" (Washington Post, 6/20).