These “medical loss ratio” provisions require large-scale health insurers to spend 80 to 85 percent of consumers’ premiums on direct care for patients and efforts to improve care quality.
If they don’t, the insurance companies will be required to provide a rebate to their customers starting in 2012.
The regulations also provide more transparency — requiring insurance companies for the first time to publicly report how they spend premium dollars.
“The HHS announcement today comes as many families are struggling to keep their health care costs down,” said Congressman Gregorio Kilili Camacho Sablan.
“While it won’t make a difference for everyone, it will insure that large insurance companies look out for each of us by making them accountable for what they spend money on and requiring them to refund consumers some of their hard-earned money if they can’t account for that money.”
Today, many insurance companies spend a substantial portion of consumers’ premium dollars on administrative costs and profits, including executive salaries, overhead, and marketing.
Currently, over 20 percent of consumers are in plans that spend more than 30 cents of every premium dollar on administrative costs; and an additional 25 percent of consumers are in plans that spend between 25 and 30 cents of every premium dollar on administrative costs.
Under the new protections announced today, many Americans will begin getting better value for their premium dollar.
The implementation of these new consumer protections will begin on Jan. 1, 2011 with rebates beginning in 2012. These important consumer protections are another example of how health reform is helping Americans even before full implementation of the law in 2014.
Millions of Americans, including those in the Northern Mariana Islands, are now receiving the benefits of the Patient’s Bill of Rights, which went into effect for plan years beginning on or after September 23, 2010.
Among its many provisions, the Patient’s Bill of Rights:
• Prohibits insurers from dropping people when they get sick.
• Requires insurers to allow parents to keep their young adult children up to age 26 on their health plan as their children work to launch their careers.
• Bans insurers from putting lifetime limits on coverage.
• Bans insurers from denying coverage to children with pre-existing conditions; and
• Requires insurers to cover key preventive services, such as mammograms and immunizations, without deductibles or co-payments.
“Today’s announcement is another step forward in implementing health reform and putting Americans, not the insurance companies, back in charge of their health care,” said Sablan.
The new regulation only affect insurance plans that enroll more than 1,000 people. Allowances can be made by the Secretary of Health and Human Services Kathleen Sebelius if the provision would negatively affect the solvency of the health insurance market. States and territories can apply for a case-by-case modification of this provision with HHS.
