The U.S. Department of Health and Human Services (HHS) has reported that American consumers have saved a total of $9 billion on their health insurance premiums since 2011 because of the Affordable Care Act.
Created through the law, the 80/20 rule, also known as the Medical Loss Ratio (MLR) rule, requires insurers to spend at least 80 percent of premium dollars on patient care and quality improvement activities or pay a rebate back to consumers. An HHS report shows that in 2013, consumers nationwide saved $3.8 billion up front on their premiums as insurance companies operated more efficiently. Additionally, consumers nationwide will save $330 million in refunds, with 6.8 million consumers due to receive an average refund benefit of $80 per family. This standard and other Affordable Care Act standards contributed to consumers saving approximately $4.1 billion on premiums in 2013, for a total of $9 billion in savings since the MLR program’s inception.
The report also shows that since the rule took effect, more insurers year over year are meeting the 80/20 standard by spending more of the premium dollars they collect on patient care and quality, and not red tape and bonuses. If an insurer did not spend enough premium dollars on patient care and quality improvement, they must pay refunds to consumers in one of the following ways:
+ a refund check in the mail;
+ a lump-sum reimbursement to the same account that was used to pay the premium;
+ a reduction in their future premiums; or
+ if the consumer bought insurance through their employer, their employer must provide one of the above options, or apply the refund in another manner that benefits its employees, such as more generous benefits.