When was the last time your insurance company wrote you a check? Thanks to the Affordable Care Act (ACA), millions of Americans are beginning to enjoy that very rare – and very satisfying – experience.
Rebates totaling more than $1.1 billion are on the way to 12.8 million consumers, all from insurers who failed to meet requirements under the ACA for effective use of health insurance premiums during 2011. The money being returned to consumers is money that insurers in the past would use for things like administrative expenses, marketing and profits – that is, for things that have nothing to do with providing timely access to needed health care.
Consumers have good reason to celebrate the end to such excessive and inefficient health insurer practices. While not all of the rebates will literally be in the form of checks – some consumers will get credits toward future premiums instead of checks – the effect is the same: here, again, we have proof of the ACA’s ability to level the playing field between powerful insurance companies and ordinary people.
The wonky term for the standards that trigger these rebates is the medical loss ratio (MLR), or the “80/20 Rule.” The MLR, defined as the ratio of health care and quality improvement costs to premium revenues (less some taxes and fees), measures how effectively an insurer uses its premium revenues to pay for health care-related expenses. The ACA sets target MLRs of 80 percent for health insurance plans sold in the individual and small-group markets and 85 percent for plans sold in the large-group market.
For small businesses and their employees, for average people doing their best to stretch their budgets in difficult times, and for a whole host of Americans rightly expecting value for money, the receipt of these MLR rebates means that for the first time all health insurers in every state are being held accountable for delivering good value to consumers. Prior to the ACA, states typically required insurers to spend only 65-70 percent of premiums on health care expenses, if they imposed MLR requirements at all, and only six states required rebates or premium credits when insurers failed to meet their MLR standards. The passage of the ACA put real teeth into the expectation that money paid to insurers for health care benefits ought to be used for covering the health care needs of their enrollees.
These rebates are a big win for consumers, and their roll out is a great opportunity for consumer advocates to aggressively publicize them. In a political environment where opponents of the ACA continue to distort and outright lie about the impact of the ACA, highlighting the real effects of the landmark law remains a crucial task for consumer advocates. Delivery of these rebates is just the most recent way the ACA has produced concrete improvements in the lives of millions of Americans who count on private health insurance to protect them from ill health.
Community Catalyst recently released an MLR Rebate Toolkit to help consumer advocates understand the MLR rebates and the opportunities they offer for effective mobilization and policy advocacy. As the rebates continue to reach consumers across the country, the need to share this good news with family and friends remains particularly important. Let’s hear more stories and testimonies from small business owners and consumers who receive a rebate!
-- Gary McKissick, Policy Intern