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Consumers saved billions on 2012 premiums under ACA

NEWS IN BRIEF — Posted July 8, 2013

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Consumers have saved nearly $4 billion on premiums under the Affordable Care Act’s medical-loss ratio provisions in 2012, according to a report released by the Dept. of Health and Human Services. This includes $3.4 billion saved up front and an additional $500 million in insurer rebates.

Compared with 2011, more insurance companies are meeting the standards set by the provisions, which require the industry to spend at least 80 cents of each premium dollar on actual medical care and quality improvement. Insurers that exceed spending on other types of expenses, such as overhead and marketing, owe rebates to consumers. The HHS report indicated that the rule prompted plans to improve coverage or decrease prices to meet HHS standards.

Insurers can pay consumers their rebate money through a variety of ways, which include mailing them rebate checks or reducing future premiums.

The medical-loss ratio rule was intended to stabilize and moderate premium rates, but according to insurer trade group America’s Health Insurance Plans, the formula has done nothing to address the chief drivers of health care costs. It puts “an arbitrary cap on what health plans spend on a variety of programs and services that improve the quality and safety of patient care,” said Clare Krusing, AHIP’s deputy press secretary.

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