Insurers paid $447 million in medical loss ratio rebates for 2016

Health insurers paid nearly $447 million in customer rebates for 2016 under a federal rule requiring payers to spend a minimum percentage of their premium dollars on medical care and quality improvement, the CMS said last week.

Those rebates issued under the medical loss ratio provision of the Affordable Care Act went to 3.9 million consumers enrolled in individual and employer-based health insurance coverage for 2016. The vast majority of insurance companies report loss ratios well above the threshold each year. For 2016, the average MLR was 92.9% in the individual market, 86.1% in the small group market, and 90.3% in the large group market, the CMS reported. Those that don't meet the MLR thresholds must refund the difference to their customers. Employers received about $153 million in rebates in the small group market and $191 million in rebates in the large group market for 2016. Consumers received about $103 million in rebates in the individual market. The average rebate per person was $114 in the individual market, $109 in the small group market, and $116 in the large group market, the CMS said. In October, the federal government proposed a rule that would allow states to lower the MLR requirements, as a way to give states more flexibility to improve the affordability of healthcare coverage. But the CMS expects few states to take advantage of the proposal. It estimates only 22 states will seek to push MLRs below the current 80% threshold.