Insurer Rebates Drop During Second Year

July 17, 2013

Insurance companies will refund their enrollees nearly eight times less during this second year of Obamacare.

In 2011, insurers nationwide granted consumers $3.9 billion in rebates for excess expenditures that did not meet the new health care law’s 80/20 rule. The rule requires that 80 cents of every premium dollar goes towards patient care. Any excess spending on administrative, marketing, taxes and executive pay costs must be returned to enrollees. This year the number dropped to $500 million.

The reduced rebate indicates increased insurer efficiency and compliance with the nation’s health care law. This August, rebates will be distributed to 8.5 million enrollees who will receive an average rebate of $100 per family.

Health and Human Services Secretary Kathleen Sebelius says that the medical pay out provision under Obamacare has saved the federal government $5 billion in the last two years.

The reduction in rebates points toward increased efficiency and improved cost controls among insurance carriers as they work to comply with the 80/20 rule. And some were able to avoid paying any rebates at all this year. In 2011, Blue Cross Blue Shield of Tennessee had to pay $8.6 million in rebates to 73,000 policy holders; this year the insurer met all federal requirements.

Insurer Refunds Drop this Summer

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