Obamacare saves Michigan insurance customers $18.6 million

For the second consecutive year, Obamacare will be producing rebates -- this time averaging $138 per Michigan family that qualifies -- due to overcharges by health insurance companies.

Health and Human Services Secretary Kathleen Sebelius announced today that 222,000 Michigan residents will benefit from $18.6 million in reimbursements under the Affordable Care Act’s 80/20 provision.  

That mandate says that insurers must spend 80 percent of their revenues derived from premiums on health care coverage and no more than 20 percent on administration and advertising. Insurers that don’t meet that standard must send rebates to their customers.

According to HHS, consumers nationwide will receive $500 million in rebates, with 8.5 million households receiving an average rebate of approximately $100 each. HHS also calculates that the 80/20 rule forced insurance companies to operate more efficiently and, as a result, 77.8 million consumers saved $3.4 billion up front on their premiums. The department claims that many insurers responded to the initial round of rebates in 2012 by lowering prices or improving their coverage.

 

Under the ACA’s “Medical Loss Ratio” standard, insurance companies must send rebates by Aug. 1 that will compensate for the amount by which they exceeded the 80/20 limit.

“This new standard is increasing transparency and accountability, promoting better business practices and competition among insurance companies, and ensuring consumers receive value for their premium dollars,” Sebelius said in a statement.  “Today’s announcement shows that more Michiganians are benefiting from the tools created under the Affordable Care Act to keep consumer costs down.”

Michigan residents will receive a rebate in one of the following ways:

* a rebate check in the mail

* a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card

* a reduction in their premiums

* or their employer using rebates to improve their health coverage

First, insurance companies that do not meet the standard will send their customers a notice informing them of the rule.  The notice will also let consumers know how much the insurer did or did not spend on patient care or quality improvement, and how much of that difference will be returned as a rebate. 

In a press release, HHS said: “The 80/20 rule works, along with the required review of proposed double-digit premium increases, to stabilize and moderate premium rates.  And, with new market reforms, including the guaranteed availability protections and prohibition of the use of factors such as health status, medical history, gender and industry of employment to set premiums rates, this policy helps ensure every American has access to quality, affordable health insurance.

For an overview of various insurers’ 80/20 data for 2012,  you can click here.  

For more information on the 80/20, rule, you can click here.