Health Insurance Companies To Pay Out More Than $1 Billion In Rebates To Customers: Reports
The Huffington Post | By Jeffrey Young
Posted: 04/26/2012 12:42 pm Updated: 04/26/2012 12:42 pm

FOLLOW: Health Insurance, Health Care, Health Care Reform, Health Care, Health Care, Health Care Costs, Insurance, Medical-Loss Ratio, Obamacare, Business News

Health insurance companies will pay out more than $1 billion in rebates to consumers this year under a provision of the health care reform law.
Want some cash back from your health insurance company? There’s a good chance your or your employer might be getting some because of health care reform.

That’s because health insurance companies will have to pay out more than $1 billion in rebates to customers this year for spending too little of the premiums they receive on medical care, according to two new reports.

The rebates will total $1.3 billion this year and almost half will go to job-based health insurance plans, according to the Henry J. Kaiser Family Foundation. Individual rebates will range from $1 to $517, depending on the type of insurance plan, how much the company spent on medical care and where the customers live, the report says. Insurance companies can issue rebate checks or deduct the money from future bills, but employers who provide health benefits to workers will often pocket the money, rather than the employees, the report says.

The health reform law requires health insurance companies to spend 80 percent to 85 percent of the premiums customers pay on their actual medical care, rather than administrative overhead, other expenses or profits. Taxes and regulatory costs aren’t included, according to the Kaiser Family Foundation.

Congress and Obama added the rebate requirement as a means of ensuring insurance customers would get their money’s worth, but the rule doesn’t apply to the so-called self-insured plans used by many large employers that pay medical bills directly and hire health insurance companies to administer benefits.

In the health insurance industry, the proportion of premiums they spend on medical care is known as the “medical loss ratio” and is considered a measure of a company’s efficiency and future profitability.

“The rebates provided under the Medical Loss Ratio provision, while not particularly large in many instances, are among the more tangible effects of the ACA felt by consumers until the major provisions of the health reform law go into effect in 2014,” the Kaiser Family Foundation report says. Other parts of the health care reform law, such as federal oversight of proposed health insurance premium increases, have probably kept prices down and saved customers money, the report says.

Goldman Sachs projects the rebates will be slightly higher than estimated by the Kaiser Family Foundation, Bloomberg News reports. According to the investment bank, health insurance companies will pay out $1.4 billion in rebates this year with $850 million coming from eight big for-profit companies and $250 million from nonprofit Blue Cross and Blue Shield plans, Bloomberg News reports.

Thirty-one percent of people who buy health insurance directly are likely to receive rebates that will average $127, the Kaiser Family Foundation reports. In Texas, the state with the highest rate of uninsured people in the United States, 92 percent of these customers will be due an average rebate for $178.

That’s not to say all consumers will be getting rebates, reports Kaiser Health News, which is affiliated with the foundation that issued the report. Federal regulators granted exemptions from this rule to Georgia, Iowa, Kentucky, Maine, Nevada and New Hampshire, which convinced the Obama administration that the insurers in their states wouldn’t be able to meet the 80 percent to 85 percent threshold and would cease offering plans to their residents. The Kaiser Family Foundation report doesn’t include California because the data weren’t available.

The Supreme Court heard arguments last month in a lawsuit challenging the constitutionality of the health care reform law. A ruling is expected by the end of June. The high court could vote to overturn the entire law or parts of it, such as the individual mandate that most Americans obtain some form of health coverage.



  1. The medical loss ratio provision is actually one of the best features of PPACA; my only complaints about it were the exemptions that were granted and that the required ratio seemed to be a bit on the low side, given the volume of premium dollars involved! It occurs to me that insurers (and I spent over a decade in that industry) could greatly reduce their administrative costs by simplifying policy forms and making the exclusions less nitpicky – but that’s just me 🙂 Thanks for the post; peace be with you – Kelly

  2. Having read this I thought it was really enlightening.
    I appreciate you spending some time and effort to put this informative article together.
    I once again find myself spending a lot of time both reading
    and leaving comments. But so what, it was still worthwhile!

  3. Pingback: URL

  4. My partner and I absolutely love your blog and find
    nearly all of your post’s to be precisely what I’m looking for.
    Does one offer guest writers to write content for you? I wouldn’t mind producing a post or elaborating on some of the subjects you write about here. Again, awesome site!

    • Hello!

      I love the informative who does the research as well. Any elaboration in such manner is welcome. Nothing better than an intelligent response to current, relevant topics of discussion. Feel free to respond in any intelligent, creative manner.

      Thanks again for viewing and commenting,

  5. Pingback: online health insurance quotes

  6. Pretty component to content. I just stumbled upon your website and in accession capital to assert
    that I acquire actually loved account your blog posts.

    Any way I’ll be subscribing to your feeds or even I success you get right of entry to consistently quickly.

  7. My partner and I stumbled over here by a different
    web address and thought I should check things out.
    I like what I see so i am just following you. Look forward
    to looking over your web page for a second time.

  8. Pingback: buy Backlinks

  9. Whats up very cool blog!! Guy .. Excellent .

    . Amazing .. I will bookmark your site and take the feeds additionally?
    I’m happy to seek out a lot of useful information right here within the publish, we’d like develop
    extra techniques in this regard, thank you for sharing. .
    . . . .

  10. Where are your resources for HEALTH INSURANCE REBATE? REFORM | Author Thelma Cunningham? After learning about best health insurance plans I like to understand more.

  11. Pingback: ラッシュガード 格安

  12. Even if it doesn’t work like HEALTH INSURANCE REBATE? REFORM | Author Thelma Cunningham explains. the best health insurance companies based opportunities still exist.

    • Hello!

      For me health insurance is a pocket expense crisis. You cannot afford it and yet you cannot afford to be without. Do not take this issue lightly as well as all the issues of services surrounded around health care. It is a true matter of life or death. I tell ya for sure about getting too sick and then becoming an experiment instead of a patient. Crisis! We are indeed here. Not only are folks unsure about what services are available to them still, how much the services will cost, will this new universal plan indeed benefit all people, as well as where is the money. Where do I get the money to pay out of pocket. Where is money coming from to support the universal proposal and indeed law and what do I do if I have none at all and how do I now get on board and make applicable what a new law says that I am now privilege to be a recipient of.

      Employers dropping plans since this new law now exists or have drastically reduced what amount of coverage the company will now provide. Crisis.

      Doctors choosing whether or not you stay in the waiting room or receive services. Crisis. In the waiting room waiting to have services rendered was always a crisis for the poor and under served. They are indeed everywhere and not just in a run down neighborhood.

      That is just part of the snap shot of expression.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s