A new report from the U.S. Department of Health and Human Services estimates health-care consumers have saved an estimated $2.1 billion on premiums. The federal Affordable Care Act has rate-review rules that prohibit insurance companies in all states from increasing rates without accountability. Since last September, insurance companies that want to raise rates by 10 percent or more have been required to submit their justifications for rate review. That has prevented roughly $1 billion in rate hikes, according to the report.
The Affordable Care Act’s medical loss ratio rule has provided rebates worth $1.1 billion to almost 13 million consumers, according to the report. The 80/20 rule requires insurance companies to disclose how much of premium dollars they spend on health-care services and how much on administration. They generally must spend 80 percent on care (85 percent in the large group market) and 20 percent on administration. If they spend less than 80 percent on medical care and quality, they must return the portion of premium dollars that exceeded the limit to consumers.
Insurance companies were required to submit their annual medical loss ratio reports for 2011 by June 1, 2012. Rebates must be paid by Aug. 1 each year, either in a payment or a reduction in future premiums.
“The health care law is holding insurance companies accountable and saving billions of dollars for families across the country,” Health and Human Services Secretary Kathleen Sebelius said in a statement today. “Thanks to the law, our health care system is more transparent and more competitive, and that’s saving Americans real money.”
Forty-two states have used rate-review grants from the federal government to strengthen their review processes, Sebelius said. New York is one of 30 states whose rate-review processes have been deemed effective.