HHS: Consumers save $9B in premiums under PPACA medical loss ratio rule

American consumers have saved a total of $9 billion on health insurance premiums since 2011 under the medical loss ratio provision included in the Patient Protection and Affordable Care Act, according to an HHS report.

The savings come from refunds and reduced overhead. The medical loss ratio shows the percentage of premium dollars an insurer spends on medical care and quality improvement expenses, minus what the company spends on overhead (profits, administrative costs and sales expenses). To cut the cost of insurance to consumers and the government, since 2011, the PPACA has required health insurers to maintain a minimum medical loss ratio of 80 percent in the individual and small group markets and 85 percent in the large group market. Health insurers that spend less than those percentages on quality improvement and medical care must pay the difference in the form of rebates to their members.

In 2013 alone, consumers saved $3.8 billion up front from insurers operating more efficiently and received $330 million in refunds, according to HHS. Additionally, the number of insurers meeting or exceeding the MLR standard has gone up since 2011. For instance, the percent of individual insurance market enrollees covered by insurers that met or exceeded the MLR standard rose from 62.3 percent in 2011 to 81.2 percent in 2013.

Earlier this year, The Commonwealth Fund released an analysis that found health insurers paid out approximately $1.5 billion in rebates to consumers in 2011 and 2012 for failing to comply with the PPACA medical loss ratio provision. Additionally, insurers reduced administrative costs and profits by $1.75 billion, in part to reduce the rebates they might be required to distribute, according to the analysis.

More Articles on the PPACA:
Fitch: Conflicting Insurance Subsidy Decisions Lead to More Risks For Hospitals  
Kaiser Family Foundation CEO: Enrolling Uninsured Under PPACA Will Get Tougher With Time
PPACA Approval Remains Stable in July: 8 Statistics 


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