Health care law’s MLS rule expected to save consumers $1.3 billion in 2012

WTF Kaiser Foundation ACA MLR 5.1.12

Consumers and businesses will save an estimated $1.3 billion this year under the health care law’s Medical Loss Ratio provision, according to a study by the Kaiser Family Foundation. 

SOURCE: CDC.gov / Amanda Mills

Read more: Health insurance costs rising faster than wages & inflation

The Affordable Care Act implemented the MLR to help control rising insurance premiums by capping insurers’ spending on administrative, marketing, and investor profits.

The MLR provision requires insurance companies to spend at least 80% to 85% of the premiums they charge to cover medical costs. Insurers who fail to meet the MLR standards are required to issue rebates to individuals and businesses.

Read more: Health care law’s MLR provision would have saved consumers $2 billion in 2010

The MLR provision went into effect last year, and the 2011 rebates are expected to be issued later this year.

The Kaiser Foundation study estimated that 31% of consumers with individual plans, 28% of businesses with small group plans, and 19% of businesses with large group plans will receive premium rebates for 2011. The rebates could total $1.3 billion, and the estimated savings averaged to $127 per enrollee in the individual market, $76 per enrollee in the small group market, and $14 per enrollee in the large group market.

“This study shows that asking insurance companies to put more of their premium dollar towards patient care rather than administration and profits is not only popular but also effective,” said Kaiser President and CEO Drew Altman. “There are tangible benefits for consumers and employers.”

However, if the Supreme Court decides to strike down the entire health care law, then insurance companies won’t have to abide by the MLR provision and consumers and businesses stand to lose billions more in the future.

 


Kaiser Foundation MLR rebate estimates for 2011: 

Total rebate: $1.3 billion

Individual plans: $426 million in rebates will be issued to 3.4 million people

Small group plans: $377 million in rebates will be issued to 4.9 million enrollees

Large group plans: $541 million in rebates will be issued to 7.5 million enrollees

 

Click here to download the state-by-state MLR estimates in the individual market.

Click here to download the state-by-state MLR estimates in the small group market.

Click here to download the state-by-state MLR estimates in the large group market.

 


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3 Comments on “Health care law’s MLS rule expected to save consumers $1.3 billion in 2012

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