In Texas, some health insurers owe rebates of $95 a family

Federal health officials announced Thursday that more than 725,000 Texans will receive rebates this summer because their health insurer fell short of a requirement that it devote at least 80 percent of premium revenue to medical care.

Under the federal health law’s “medical loss ratio” rule, insurance companies owe 726,237 Texas residents about $ 46.3 million, said U.S. Health and Human Services Secretary Kathleen Sebelius.

That works out to an average of about $ 95 per affected family, she said.

Insurers may rebate the money in several ways — cutting a check to the consumer, giving a credit if credit cards or debit cards were used to pay premiums or reducing premiums. If an employer bought the affected policy, the employer can plow the rebate into improved health coverage. All rebates are due by Aug. 1.

“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. “Today’s announcement shows that more Texans are benefiting from the tools created under the Affordable Care Act to keep consumer costs down.”

The insurance industry has criticized the rebates as misdirected, focusing attention on their overhead and profits when the real culprit behind rising premiums is the rising cost of medical care. In Texas, some insurance agents have said the rule effectively means a carrier can’t set aside part of net profits from a good year to tide it over during a bad year.

But consumer groups and President Barack Obama’s administration love the rule, saying it’s already curbed premium hikes. This is the second year consumers have received rebates.

To avoid rebates, insurers must spend at least 80 percent on medical care and quality improvements in the markets for individuals and small groups (two to 50 employees) and at least 85 percent in the large group market.

This entry was posted in Barack Obama, Health care politics, Issues and tagged health care law, health insurance, Kathleen Sebelius, medical loss ratio, Obamacare by Robert T. Garrett. Bookmark the permalink.

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