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Some 600,000 Floridians Getting Rebates from Insurers Not Complying With Health Care Law

| July 17, 2013

They call it overhead. (Phil Whitehouse)

They call it overhead. (Phil Whitehouse)

Insurers for more than 600,000 Floridians will have to rebate some of the premium from last year because they didn’t comply with the spending rules in the Affordable Care Act, according to federal health officials.

The amount that must be refunded in this state by Aug. 1 tops $54 million, according to the Center for Consumer Information & Insurance Oversight.  That’s only half of what insurers had to pay in rebates to Floridians last year.

While everyone likes to get a rebate, it’s actually good news that the amount owed to consumers has dropped, said Leah Barber-Heinz of the consumer group Florida CHAIN.

“It means that the Affordable Care Act is working and health care consumers are getting more value for their hard-earned dollars,” she said.

Nationally the story was the same: The rebates for 2012 totaled $504 million, down from $1.1 billion from the year before.

Individuals in FL to Get $40 Million

The Affordable Care Act requires that a certain percentage of the premium dollar be spent on medical care, rather than administrative costs and profits. This percentage is called the “Medical Loss Ratio,” or MLR. For large group plans, it’s 85 percent. For individual policies and small group plans, which have higher enrollment costs per policy, it’s 80 percent.

Of the $54 million in Florida rebates now being sent out, nearly $40 million of it is going to people who bought their own policies, as individuals or families. More than 300,000 people can expect to see these rebate checks, with an average of $164, according to the federal data.

About $13 million in checks will be going to employers who bought coverage for 255,000 workers in the small-group market. And about $1.5 million in rebates will go to large employers.

The logic behind the MLR limits is that they provide a moderating influence on prices, since there’s no point in a company jacking up premiums if it can’t keep the extra profits.

The rebate program is modeled on a Minnesota law passed 20 years ago. That state’s Democratic Sen.  Al Franken, who pushed for the MLR rule over the protest of insurers, told  the Minneapolis Star-Tribune that the drop in rebate amounts shows that the program is working as intended.

He said, “People are saving the money up front … and companies are using the 80 or 85 percent of premiums on actual health care. Which is the point.”

Golden Rule Owes the Most

In Florida this year, the biggest surprise in the rebate report is what’s missing. Last year the largest rebate payer was Blue Cross and Blue Shield of Florida (now called Florida Blue). It paid rebates of $27 million in the small-group market, but this year the company owes no rebates  in any market.

This year’s largest rebate payment in Florida is due from Golden Rule Insurance Co.,  a major player in the individual market. It must send out more than $20 million, according to the federal agency.

Second-highest rebate total for Florida is $11.7 million, from UnitedHealthcare Insurance Co. Both Golden Rule and UnitedHealthcare Insurance Co. are part of UnitedHealth Group,  the largest single health carrier in the country and state.

The third-highest rebate total in Florida is $7.9 million in the individual market from Humana Insurance Co., Inc. A sister company that also sells to individual policyholders, Humana Health Insurance Co. of Florida Inc., must pay $3.2 million.

UnitedHealth Responds

UnitedHealthcare’s director of public relations for Florida and the Gulf States Region, Elizabeth Calzadilla-Fiallo of Miami, sent the following statement in response toHealth News Florida’s request for comment:

“UnitedHealthcare is the largest commercial health insurer in the U.S. today, providing coverage to more than 27 million individuals. The $150 million in rebates (nationally) would amount to approximately $15 per person if spread evenly across our entire commercially insured population enrolled in a plan that was eligible for a rebate. Not all plans needed to issue a rebate based on the MLR guidelines; in fact, less than 3 million people nationwide are enrolled in plans that qualified for a rebate payment.

“Premium rates continue to reflect the rise in health care costs – what physicians, hospitals, drug companies and others charge – which is what drives rate increases. As we enter 2014, premiums will rise further for many individuals because of the new fees, surcharges and essential benefit requirements under (the Affordable Care Act). For example, the total industry-wide rebates will be just over $1 billion, while new federal taxes, fees, and assessments that take effect in 2014 will total more than $20 billion.

“Also, according to the latest National Health Expenditure data, the portion of premiums allocated to health plans’ administrative costs in 2010 was among the lowest in recent years, despite the fact that health plans have been incurring new compliance and regulatory costs related to the health care reform law. According to the latest SEC data, the average profit margin for the health plan industry in 2011 was 3.2 percent – a 27-percent decrease from 2010.

“You may also want to consider that our rebate is less than one-half of one percent of UnitedHealthcare’s total annual premium collected,” she wrote.

–Carol Gentry, Health News Florida

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9 Responses for “Some 600,000 Floridians Getting Rebates from Insurers Not Complying With Health Care Law”

  1. The Truth says:

    The Affordable Care Act, if properly instituted by each state, will work in the long run. Our health care industry is a runaway train. The ACA is not perfect but it’s a much needed start. No other politician cared about doing something like this.

    Now the question is – how will Fox News spin this around?

  2. Dennis says:

    Have to disagree with the part about not raising premiums. I got a rebate last year from Golden Rule and they still jacked up my rate by 100.00 a month for the following year. You can try to sugar coat this new health care law all you want. Reality is, premiuims are not going down and nothing is getting cheaper.

    • Nancy N. says:

      Since the major element of the ACA law – the individual mandate – doesn’t even go into effect until January 1st, it’s WAY too early to make any judgements about whether the law is “working” or not. Saying it’s not working right now would be like saying that a car that is still on the assembly line is a clunker because it doesn’t run.

  3. Bill McGuire says:

    Please don’t say that the Affordable Health Care law is working until previously uninsured/uninsurable people are now covered. After all, that’s what the act was designed to accomplish.

  4. Sherry Epley says:

    Obama care IS working! This from the Associated Press, August 2012:

    Just this week, an estimated 47 million women across America gained access to eight new medical services at no out-of-pocket cost. Here, five ObamaCare provisions you can already take advantage of:

    1. Free preventative care for women
    As of Aug. 1, insurance plans are required to cover free annual physicals for women, HIV testing and counseling, HPV DNA testing, screenings for gestational diabetes, screening and counseling for domestic violence, breastfeeding medical support, counseling for sexually transmitted infections, and FDA-approved contraceptive products. That last item has been a source of major controversy, with conservatives claiming that the Obama administration is forcing religious employers to violate their beliefs and cover the costs of birth control. The government has exempted houses of worship from the requirement, and has also extended a one-year reprieve to other religiously associated employers.

    2. Insurance company rebates
    As of Aug. 1, insurance companies are required to spend at least 80 percent to 85 percent of their customer premiums on direct medical costs. If companies fail to do so, they must send the leftover cash back to customers in the form of a rebate. The average rebate across the nation is expected to be around $150.

    3. Free mammograms and colonoscopies
    Since September 2010, insurers have been barred from levying out-of-pocket costs on patients receiving mammograms and colonoscopies, two of the most widely used forms of preventative care.

    4. Staying on your parents’ plan
    Since September 2010, children have been allowed to stay on their parents’ insurance plans until they turn 26.

    5. Get insurance for kids with pre-existing conditions
    Since September 2010, insurance companies have been banned from denying coverage to children with pre-existing conditions, which include heart disease, cancer, asthma, and high blood pressure. By 2014, the provision will extend to all Americans with pre-existing conditions. It is also illegal for insurance companies to terminate coverage for any other reason than customer fraud — and insurers are barred from capping the number of benefits a customers can receive in a lifetime.

    • Dennis says:

      Free preventive care for women, Free mammograms and colooscopies! Really! You think these medical services are free? Please let us know what fine physician is donating his or her time and services for free.

  5. Magnolia says:

    Nothing is FREE, Sherry. Some poor taxpayer somewhere is paying for your FREE healthcare.

    I’d love to hear Nancy Pelosi sit down and explain to doctors, insureds and uninsureds THE EXACT DETAILS of this mess. I still don’t think she knows.

  6. Sherry Epley says:

    You are right. . . the words should be “fully covered by the policy” whose premiums are paid by the policyholder, or prepaid by years of payroll deductions into Medicare. . . NOT the tax payer!

    I am thinking that those who protest against Obamacare would certainly be hypocritical if they ever used it. Certainly they will always remain in perfect health, will always be able to pay for higher and higher insurance premiums and deductibles and copays, they will never have a spouse or child with a major illness. They do not need anyone but themselves, for they are perfect!

  7. RHWeir says:

    The insurers will work around it. The providers already have dodging the mandatory covered services by up coding to a higher paid service. What about the Admin Ratios?

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