Obama healthcare reforms lead to $1.3 billion in insurance rebates

WASHINGTON -- U.S. consumers and businesses will receive an estimated $1.3 billion in rebates from insurance companies this year, according to a new study quantifying a key early benefit of the healthcare law that President Obama signed in 2010.

That will translate into anywhere from a few dollars to more than $150 for some 15 million consumers nationwide, the new report by the nonprofit Kaiser Family Foundation found.

Obama’s healthcare law requires insurers to spend a minimum portion of customers’ premiums on medical care, a provision championed by consumer groups concerned that companies were hiking premiums to pay for executive salaries, shareholder dividends and other expenses unrelated to their customers’ care.

Starting last year, if insurers did not meet these targets – known as medical loss ratios – they had to pay rebates this year to people enrolled in their plans.

The Kaiser study, which analyzed rate documents filed with state regulators nationwide, found 486 health plans nationwide that will be required to pay rebates, with the largest number in the so-called individual market serving people who do not get health coverage through work.


Nearly a third of all consumers in this market, which is widely seen as the most trouble-plagued in the country, will be eligible for a rebate.

Approximately a quarter of consumers in the small group insurance market and less than a fifth of consumers in the large group market qualified for rebates.

The study also found wide variation in states, with insurers selling individual health plans in some states such as Alaska, Maryland and Pennsylvania required to provide average rebates of around $300. In Hawaii and Maine, by contrast, no insurers in the individual market will have to provide rebates.

Data was not available for California because HMOs in the state are not subject to the same reporting requirements.

Despite the rebates, consumers still face steeply rising insurance premiums. The cost of employer-provided family health plans jumped 9% last year, according to an annual survey by the Kaiser Family Foundation and the Health Research and Educational Trust.

That has fueled criticism of the new law for not doing enough to control healthcare costs.

The authors of the Kaiser report noted that the new requirements likely mitigated some rate hikes, however, in part by pushing insurers to seek smaller premium increases than they might have.

“Greater regulatory scrutiny of private insurance is improving value and helping to get excess costs out of the system,” said Kaiser President and Chief Executive Drew Altman.

Original source: Obama healthcare reforms lead to $1.3 billion in insurance rebates