A federal rule requiring health insurers to spend a minimum percentage of premium dollars on medical care led to more than $332 million in consumer rebates last year, HHS reported last week. The figure is much lower than in the previous two years, which the Obama administration said reflects that insurers charged lower rates so they would clear the threshold.
Rebates issued under the medical-loss-ratio provision of the Affordable Care Act totaled $504 million in 2012 and $1.1 billion in 2011. But HHS said the rule saved individual consumers and employers a total of $4.1 billion in 2013 through lower premiums.
Intended to curb excessive administrative costs and profits, the medical-loss ratio requires health plans in individual and small-group markets to spend at least 80% of premium dollars on healthcare and efforts that improve care quality. That figure rises to 85% for insurers in the large-group market. Companies that don't meet the standard must refund the difference to their customers.