Insurers Owe Small Firms Millions Under Medical-Loss Ratio Rule
Health insurers in California owe small businesses policyholders millions of dollars in rebates under a provision in the Affordable Care Act, the Los Angeles Times reports.
The insurers disclosed the rebates in reports to the state Department of Managed Health Care (Terhune, Los Angeles Times, 6/4).
About ACA Provision
Under the ACA's medical-loss ratio provision, 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 (California Healthline, 12/5/12).
In 2012 -- the first year the rebate was effective -- health insurers refunded $74 million to nearly two million California residents.
Details of Rebates
This year, most of the rebates will be issued to small business policyholders, rather than large employers or individual policyholders.
Rebate totals for small business policyholders include:
- $24.5 million from Blue Shield of California;
- $12 million from Anthem Blue Cross;
- $3 million from UnitedHealth Group; and
- $2.3 million from Health Net.
Meanwhile, Kaiser Permanente has reported that it owes $2.7 million in rebates to about 66,000 individual policyholders.
The final rebate amounts might change before Aug. 1, the deadline for insurers to issue the money.
Jon Fox -- consumer advocate at the California Public Interest Research Group Education Fund -- said, "Millions of dollars in rebates are a clear sign that health insurers are overcharging consumers." He added, "Health insurers should work to cut upfront premiums rather than reimburse consumers afterward."Darrel Ng, a spokesperson for Anthem, said that predicting health care costs is "an inexact science" (Los Angeles Times, 6/4). 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.