Affordable Care Act - Medical Loss Ratio rebates

My wife and I just received a letter from our health insurance carrier, informing us of a certain status under the Patient Protection and Affordable Care Act (ACA), derisively known as "obamacare."  The letter refers to the law's "Medical Loss Ratio" rebate.  Under the ACA, insurance companies must spend at least eighty percent (in some cases 85%) of the premiums they collect on services, not administration or advertising or like expenses that typically increase health care costs without adding to the value of the services. 

 

One of the most egregious causes of exorbitant health care costs in our country are those non-services expenses, i.e., the costs of doing business.  One of the greatest achievements of the ACA is to drive those costs of doing business down and out of the cost of health care in theUnited States.  This is good -- it is very, very good.

 

As our insurance company representative explains in the letter, "If a health insurer does not spend at least 80 percent of the premiums it receives on health care services and activities to improve health care quality, the insurer must rebate the difference.  A health insurer's Medical Loss Ratio is determined separately for each State's individual, small group and large group markets in which the health insurer offers health insurance. ... No later thanAugust 1, 2012, health insurers must send any rebates due for 2011 and information to employers and individuals regarding any rebates due for 2011."

 

Did you get a letter like this from your health insurance company?

 

Our insurance company was glad to report that they had fallen within the ratio, so we were not receiving a rebate.  I say good, because that means that our insurance company is conforming to best practices, as laid out by the ACA.  It gives us confidence in our insurance company.  If we want further information on this aspect of the ACA, our company refers us in the letter to the government website, healthcare.gov.  I've been to that website many times and found it always useful.


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