Your check might not be in the mail…and that’s a good thing

Experts

Health Policy Analyst
Senior Associate, Health Reform Campaigns

By Blake Hutson on Friday, August 1st, 2014

Insurance companies have drastically lowered consumer rebates in just three years, you may be confused as to why this is a good thing.

First a little refresher, all of these rebates are the result of an Obamacare program commonly called the 80/20 rule.  In brief, the rule is designed to make sure insurers spend their money on healthcare rather than profits and administration. Generally, insurers must spend at least 80% of premiums on actual healthcare or they’ll have to pull out their checkbooks and send money back to policyholders. In the first year of the rule they paid back over 1 trillion in rebates, more than half a million in year two, and in the third year rebates are down to about $330 million, roughly a third as much as year one.

Here’s the catch, you should be excited about this. The rule is laser focused on low value insurance companies that have long been wasting insurance premiums on overhead including profits. Meanwhile, some insurance companies already operated well within the new requirements. Those days are over.

“News of lower rebates this summer may at first blush make consumers think that they are missing out on free money, but in reality it means insurers are providing better value and charging us less up front,” said Dena Mendelsohn, Health Policy Analyst with Consumers Union.

If the program works as it should, insurers should issue fewer and fewer rebates each year because the premiums they charge for health plans better reflect the cost of caring for policyholders.

Curious about how your insurance plan fared in 2013? This document lists issuers that owe rebates for 2013. Rebate checks must be mailed by August, 2014. The MLR standard is just a piece of the health insurance policy pricing puzzle; health insurance rate review is another piece. Check out our blog series to learn more about how rate review works and what consumers can do to get involved. You can also find specific rules and links for your state here. Pay attention what’s going on in where you live and don’t miss the opportunity to use your voice to demand reasonable, affordable, rates. You can follow the conversation on Twitter, using #ratereview2015 and follow our handles @CU_Health and @CU_CalHealth.

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