For the second consecutive year, Obamacare will be
producing rebates — this time averaging $138 per Michigan family that qualifies — due to
overcharges by health insurance companies.
Health
and Human Services Secretary Kathleen Sebelius announced today that 222,000
Michigan residents will benefit from $18.6 million in reimbursements under the Affordable
Care Act’s 80/20 provision.  
That
mandate says that insurers must spend 80 percent of their revenues derived from
premiums on health care coverage and no more than 20 percent on administration
and advertising. Insurers that don’t meet that standard must send rebates to
their customers.
According
to HHS, consumers nationwide will receive $500 million in rebates, with 8.5
million households receiving an average rebate of approximately $100 each. HHS
also calculates that the 80/20 rule forced insurance companies to operate more
efficiently and, as a result, 77.8 million consumers saved $3.4 billion up front
on their premiums. The department claims that many insurers responded to the initial round of rebates in 2012 by lowering
prices or improving their coverage.
 
Under
the ACA’s “Medical Loss Ratio” standard, insurance companies must send rebates
by Aug. 1 that will compensate for the amount by which they exceeded the 80/20
limit.
“This
new standard is increasing transparency and accountability, promoting better
business practices and competition among insurance companies, and ensuring
consumers receive value for their premium dollars,” Sebelius said in a
statement.  “Today’s announcement shows that more Michiganians are
benefiting from the tools created under the Affordable Care Act to keep
consumer costs down.”
Michigan
residents will receive a rebate in one of the following ways:
* a
rebate check in the mail
* a
lump-sum reimbursement to the same account that they used to pay the premium if
by credit card or debit card
* a
reduction in their premiums
* or their
employer using rebates to improve their health coverage
First,
insurance companies that do not meet the standard will send their customers a notice
informing them of the rule.  The notice will also let consumers know how
much the insurer did or did not spend on patient care or quality improvement,
and how much of that difference will be returned as a rebate. 
In
a press release, HHS said: “The 80/20 rule works, along with the required
review of proposed double-digit premium increases, to stabilize and moderate
premium rates.  And, with new market reforms, including the
guaranteed availability protections and prohibition of the use of factors such
as health status, medical history, gender and industry of employment to set
premiums rates, this policy helps ensure every American has access to quality, affordable
health insurance.
For
an overview of various insurers’ 80/20 data for 2012,  you can click here.  
For
more information on the 80/20, rule, you can click here. 

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