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‘Free money' and insurance industry warnings

Insurance coverage is nice but nothing beats free money.

At least, that's the apparent political thinking that has elevated new estimates on expected rebate checks to the marquee position whenever senior Democrats—including the president—have commented on the healthcare law in recent days.

An estimate released last Thursday (PDF) concluded that $1.3 billion in rebates will go out this summer to more than 3 million policyholders from private health insurers that exceed new medical loss ratio limits. It quickly became a top healthcare line for Democrats.

For instance, at a Sunday fundraiser in a wealthy Washington suburb, President Bill Clinton began his comments on the 2010 federal healthcare law by highlighting the expected rebates.

“So I noticed yesterday that the American people are about to get—not counting California, our biggest state—$1.3 billion in refunds on their health insurance premiums because the healthcare law says that you have to spend 85% of your healthcare premium on healthcare and not profits and promotions,” Clinton said.

When it was his turn to speak, President Barack Obama finished his healthcare comments to the well-heeled crowd by noting that “now we're seeing rebates all across the country—over a billion dollars in rebates to consumers, even as healthcare costs overall are going down.”

The billion dollar-plus rebates, estimated by a Kaiser Family Foundation report, fit the Democratic narrative that the law tames greed-driven profiteering by insurers and helps the little guy.

But the report also notes that those little guys lucky enough to qualify for a rebate check should keep their expectations little, as well.

The rebates, when averaged over all enrollees in the various insurance markets, will total $39 for individual insurance policies, $21 small group policies and $14 for large group policies.

Accompanying those modest checks, according to insurers, will be unintended consequences “likely to outweigh any benefit these rebates will provide to consumers.”

“Moreover, the taxes, benefit mandates, and other regulations included in the healthcare reform law will cause premium increases that far exceed the value of prospective rebates,” the blog for America's Health Insurance Plans said Thursday.

Well, free money's got to come from somewhere.

Follow Rich Daly on Twitter @MHRDaly.

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