Health reform implementation

Report: Health law rule to yield $1.3 billion in insurance rebates

A rule created by the 2010 healthcare law and finalized Friday will yield about $1.3 billion in insurance rebates for nearly 16 million Americans, according to estimates by the Kaiser Family Foundation.

The rule, known as the medical loss ratio (MLR), mandates that insurers spend roughly 80 percent of all premiums on healthcare rather than on marketing, executive bonuses or other administrative costs.

The rebates  — which the Obama campaign reportedly sees as a “stealth weapon” for improving opinion of the health law — will arrive no later than August 1.

“If the insurance company fails to meet this standard … in any year, they have to pay you a rebate,” Kathleen Sebelius, Secretary of the Health and Human Services (HHS) Department, wrote in a blog post.

Sebelius added that insurers will have to say if they have met or exceeded the MLR, also called the “80/20 rule,” during a given year in notices to policyholders.

“If your insurance company is providing fair value for your premium dollars, you should know that too,” Sebelius wrote.

Kaiser President and CEO Drew Altman called the two new policies “not only popular but also effective” in a statement last week.

“There are tangible benefits for consumers and employers,” he said.

The foundation’s analysis stated that, in some cases, premiums have decreased as a result of the 80/20 rule. 

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