My mailbox today contained an example that Obamacare is working for healthcare consumers. In an envelope from my health insurance provider was a check for $124.08. The cover letter from Humana explained it was a rebate of a portion of my premium, as required by the Affordable Care Act’s (ACA) Medical Loss Ratio standard.
Under the law, health insurers are required to report to HHS’s Center for Medicare and Medicaid Services (CMS) how income from premium dollars are spent. (The first year of reporting was 2011 with the previous year’s spending data.) For individual and small group plans, no more than about 20 percent of premiums can be spent on administrative costs, such as sales and advertising. (The exact percent depends on whether a State makes the case to HHS that a higher percentage is needed in order to keep the insurance market stable. Eighteen states made such requests.) If an insurer’s administrative costs exceed the Medical Loss Ratio for the year, they must refund the difference to the plan’s enrollees by August 1.
My insurer wrote:
“In Texas, Humana Insurance Company did not meet the Medical Loss Ratio standard. In 2012, Humana spent only 76.7 percent of a total of $149,433,285 in premium dollars on health care and activities to improve health care quality. Since it missed the target in your state (Texas) by 3.3 percent of premiums it received, Humana must rebate 3.3 percent of your health insurance premium.”
8.5 million U.S. health insurance consumers will be receiving $504 million this year in premium refunds. A table prepared by CMS provides a breakdown of these refunds by States, stratified by individual, small group and large group markets. The average rebate for all insurance consumers is about $100, but in some States the mean is quite a bit higher. In Idaho, the average refund for a person with an individual insurance plan is $490. For an Oregon resident who is part of a large group plan, the average refund is $1,256.
With all the moaning and groaning by Republicans on Capitol Hill about Obamacare, the refund check from my insurer is one example that the ACA is working. Sixty seven of the law’s 90 key provisions are already in effect. These include requiring insurers to permit young adults to stay on their parent’s insurance plan until age 26, and to cover the full cost of preventative health services, such as mammograms. There have also been funds provided for scholarships and loan repayment to expand the number of physicians, nurses and physician’s assistants in under-served parts of the country, for construction and expansion of community health centers, and tax credits for small businesses and small non-profits to help them purchase insurance for their employees.
No doubt it is a complex law—-the U.S. healthcare systems is a tangled beast—-but Americans are better off with Obamacare, than without it.