Insurers Refund $332M to Consumers Under MLR Rules in 2013

Consumers received more than $332 million in rebates last year under the Affordable Care Act's medical-loss ratio provision, according to an HHS report released Thursday, Modern Healthcare reports (Herman, Modern Healthcare, 7/24).

Under the MLR provision, insurers must issue refunds to customers if they spend less than 80% of the premiums they collect for plans sold on the individual and small group markets and less than 85% of plan premiums in the large group market on medical care. The remaining 15% to 20% can be used as profits or for CEO bonuses and administrative costs (California Healthline, 7/11).

According to the report, about 6.8 million U.S. residents saved a total of $3.8 billion because of the provision in 2013 and received an average refund of about $80 per family (CQ HealthBeat, 7/23). Insurers can distribute the refunds by:

• Sending checks to policyholders;
• Reimbursing policyholders' insurance accounts;
• Reducing premiums for the following year; or
• Lowering benefit costs in employer-sponsored health plans (Modern Healthcare, 7/24.)

The rebates must be dispensed by Aug. 1 (Humer, Reuters, 7/24).

The figure is significantly less than it had been the past two years, which the Obama administration attributed to insurers reducing premiums to meet the MLR thresholds. In comparison, MLR rebates totaled $1.1 billion in 2011 and $504 million in 2012 (Modern Healthcare, 7/24). Altogether, consumers have saved about $9 billion on premiums since 2011 under the provision (HHS report, 7/24).

The report also noted that almost 100 insurers refunded a minimum of $1 million last year. For example:

• Blue Cross and Blue Shield of Florida gave the most refunds, at more than $10.1 million; and
• Neighborhood Health Plan refunded more than $6 million.

According to the report, Aetna, Cigna, Humana and UnitedHealth Group also refunded large amounts to their policyholders.

Comments

HHS Secretary Sylvia Mathews Burwell said the department is continuing to "work on building a sustainable long-term system, and provisions such as the [MLR] rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long term" (Modern Healthcare, 7/24). She added, "We are pleased that the [ACA] continues to provide Americans better value for their premium dollars" (Howell, Washington Times, 7/23).

However, America's Health Insurance Plans has contended that the rule does not address actual health care or premium costs and excludes certain administrative costs, like fraud detection (Modern Healthcare, 7/24).