One provision of the Affordable Care Act that has received very little attention in the media is about to produce a pleasant bonus for many consumers. Due to something known as the “Medical Loss Ratio,” insurance companies will have to refund more than $332 million to consumers.
This is the third year that insurance companies will issue the refunds, thanks to Obamacare. In 2013, insurers returned excess premium dollars to around 8.5 million consumers. This year, around seven million customers will receive refunds averaging around $80. Not everyone will receive the money in the form of a check, however, as some insurers will apply the money to reduce future premiums. In the case of employer sponsored plans, the money will be returned to the employer.
The Medical Loss Ratio is a provision of the health care law that requires insurers to spend 80 to 85 percent of all premium dollars toward the cost of care. Insurers who fail to meet that minimum must refund the excess premium dollars to their customers. According to ModernHealthcare.com, the amount refunded last year totaled $504 million, and two years ago it was $1.1 billion. The decline in the amount that is being refunded reflects the fact that insurers are keeping premiums lower in order to comply with the rule. The Department of Health and Human Services estimates that this rule has saved consumers over $9 billion in premiums since 2011.
Once again, to the dismay of Republicans, Obamacare fails to fail.