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Franken’s health care reform rebate provision kicks in on Wednesday

WASHINGTON — The provision requires companies to provide rebate checks if they spent too much money on administrative items.

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…Insurers will pay out $1.1 billion this year, according to the Department of Health and Human Services, although most of it will not go to individuals. The average rebate will be $151 per household, with the highest in Vermont ($807 per family), Alaska ($622) and Alabama ($518). No rebates will be issued in New Mexico or Rhode Island, because insurers there met the 80/20 requirement.

Although the percentage of insurance companies that owe rebates this year is relatively small, about 14 percent, many giants of the industry are on the list. They include Aetna, Cigna, Humana and UnitedHealthcare. …

Self-insured employers, which cover more than half the nation’s workers, are exempt from the new rule, as are Medicare and Medicaid. And of the 75 million people in health plans subject to the rule, only about 17 percent, or 12.8 million, will get rebates this year, according to the Obama administration.

Many who buy coverage directly from insurers … are receiving checks. But in most cases rebates are being sent to employers, who can chose to put them toward future premium costs instead of distributing them to workers.

Affordable Care Act proponents see the MLR provision as one of the law’s biggest selling points, the Times reports, and it’s one the Obama administration has used to drum up support for the law.

“I want to take this opportunity to talk about exactly what it means for you,” Obama said in a June 28 press conference, basking in the Supreme Court’s decision on the constitutionality of the health care law. He listed many of the bill’s major provisions: no lifetime limits on care, no preexisting condition bans, etc.

“And by this August,” he said, “nearly 13 million of you will receive a rebate from your insurance company because it spent too much on things like administrative costs and CEO bonuses, and not enough on your health care.”