New report shows insurers improving efficiency, lowering profits


Dedicated to affordable, quality healthcare and coverage for all Americans.

By Consumers Union on Thursday, December 6th, 2012

New evidence out this week from the Commonwealth Fund confirms that the health reform law’s new rule holding insurers accountable for how they spend our money is proving to be the gift that keeps on giving.

Back in the summer we reported on the $1.1 billion in rebates distributed nationwide as a result of the restriction on how health insurers can spend premiums on overhead and profit. The law simply says each insurer must spend at least 80 percent of premiums on actual healthcare or rebate the difference. We heard from hundreds of consumers that received checks in the mail. But the benefits have turned out to be even bigger than expected.

The new report shows that in addition to rebates, the MLR caused insurers to provide more efficient care, reducing spending by $350 billion dollars on overhead and profits that were freed up to pay for healthcare or reduce your bills. Consumers directly benefit from this restraint on overhead as it helps to hold down your monthly health insurance bill. Of course, medical costs continue to rise so your monthly premium may have still increased but the new law is clearly putting some much needed downward pressure on health insurance premiums.

However, Congress continues to hear from lobbyists eager to gut the new rule and put a stop to these rebates, improved efficiency, and reduced profits. In September, the House Energy & Commerce committee voted in favor of a bill that would alter the calculation that, had it been in place, would have essentially ended two-thirds of the rebates consumers received this summer. We’ve been fighting for over a year now to protect your right to have a reasonable amount of your premiums pay for actual healthcare. This new report proves yet again that Congress and industry lobbyists should keep their hands off the new law.

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