Insurers to rebate $500M to consumers under MLR rule

Insurers will be refunding about $500 million to 8.5 million people this year as a result of the reform law's medical-loss ratio requirements, the U.S. Department of Health & Human Services said in a report released Thursday.

That amounts to about a $100 refund per family, down from the $152 per family rebates insurers provided consumers in 2011 for a total of $1.1 billion.

"More insurers are meeting this [MLR] standard and spending more of their premium dollars directly toward patient care and quality, and not red tape and bonuses," HHS said in a statement.

And although HHS claimed consumers saved a total of $3.9 billion in premium increases last year, the agency can't determine how much of that total to attribute directly to the MLR, reported Bloomberg. "I don't think that we are claiming that the $3.9 billion in savings is entirely due to the [MLR] rule," Gary Cohen, director of HHS's Center for Consumer Information and Insurance Oversight, told reporters on a conference call.

He added there are "other market forces that may be contributing" to the lower premiums, including a drop in healthcare spending, Reuters reported.  "As they've adjusted their prices to the new rule, as they've become more efficient and more cost effective, two things happen: the number of rebates goes down and the corresponding amount of premium that people have to pay for the value they are getting for insurance comes down as well," Cohen said.  

However, America's Health Insurance Plans disagrees with the MLR rule's affect on premium increases. The MLR rule "does nothing to address the main drivers of healthcare costs and 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," AHIP spokeswoman Clare Krusing told Bloomberg.

To learn more:
- here's the HHS statement and report (.pdf)
- read the Bloomberg article
- see the Reuters article