Blue Cross Blue Shield owes millions to Texans, again
By Consumers Union on Thursday, June 13th, 2013
Blue Cross Blue Shield of Texas is doing better but still isn’t spending enough of its customers’ premiums on healthcare, according to our analysis of new data from the National Association of Insurance Commissioners.
We’ve been monitoring insurance companies to see how well they’re complying with a provision in the Affordable Care Act that requires insurers to spend at least 80 percent of premiums on medical care — a rule called the Medical Loss Ratio. Last year, we wrote about insurers paying out more than $1 billion in rebates under this rule.
In 2012, Blue Cross Blue Shield of Texas owed $79 million to customers in Texas who buy insurance on their own (rather than a group plan through their employer) — more than any other insurer. Our most recent analysis shows improvement, but Blue Cross still owes more than $31 million to consumers in Texas, for an average rebate of about $127 per policyholder.
As a result of the MLR rule, insurance companies have improved value, including Blue Cross Blue Shield of Texas. For every $1 you pay in premiums, your insurer must spend 80 cents on actual medical care or on improving your care. If your insurer overspends on overhead like salaries and marketing costs, you’re entitled to a rebate.
But these rebates represent only a portion of the savings to consumers under the MLR rule; rate hikes have also slowed. Last week, the Kaiser Family Foundation released an analysis finding that Americans saved an estimated $2.1 billion in 2012 through rebates and lower premiums — almost double the estimated savings in 2011.
As insurance companies become more efficient to comply with the Affordable Care Act, consumers are saving money. Over time these rebates will dwindle and disappear as insurance companies continue to improve value. Blue Cross Blue Shield of Texas is getting better, but the goal should be to meet and exceed the minimum value requirement and avoid rebates all together.