HHS TOUTS $ 9 BILLION PREMIUM SAVINGS RESULTING FROM AFFORDABLE CARE ACT

FROM:  U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Consumers have saved a total of $9 billion on premiums

Health care law will return to families an average refund of $80 each this year

Health and Human Services Secretary Sylvia M. Burwell announced today that consumers have saved a total of $9 billion on their health insurance premiums since 2011 as a result 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.  If insurers spend an excessive amount on profits and red tape, they owe a refund back to consumers.

“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” said Secretary Burwell.  “We are continuing our work on building a sustainable long-term system, and provisions such as the 80/20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long term.”

An HHS report released today shows that last year alone, 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 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.

The 80/20 rule, along with other standards such as the required review of proposed premium increases, is one of many reforms created under the health law helping to slow premium growth and moderate premium rates.  Combined with the savings consumers are receiving from tax credits on the Marketplace and the new market reforms, including the prohibition of pre-existing condition exclusions and charging women more for insurance than men, the 80/20 rule helps ensure every American has access to quality, affordable health insurance.

HHS CLAIMS AFFORDABLE CARE ACT SAVES CONSUMERS $1.2 BILLION

FROM:  U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Health care law saves consumers $1.2 billion nationwide

A new report released today by the Department of Health and Human Services (HHS) shows that 6.8 million consumers saved an estimated $1.2 billion on health insurance premiums in 2012, due to the “rate review” provision of the Affordable Care Act, which brought unprecedented accountability to slow the growth of health insurance premiums.  The Affordable Care Act, along with state efforts, continues to bring scrutiny to proposed health insurance rate increases and is saving consumers real money as a result.

“Thanks to the health care law, we are seeing that holding insurance companies accountable is leading to increased competition and saving billions of dollars for consumers across the country,” said Kathleen Sebelius, Secretary of HHS. “This type of competition and transparency will continue in the Health Insurance Marketplace, or Exchanges, where Americans will be able to shop for and compare plans side-by-side to find the one that fits their needs and budget.”

Beginning on Sept. 1, 2011, the federal rate review rules under the health care law were implemented. These rules ensure that, in every state, insurance companies are required to submit for review and justify any proposed health insurance premium increase of 10 percent or more.

To assist states in this effort, the Affordable Care Act provides states with Health Insurance Rate Review Grants to enhance their rate review programs and bring greater transparency to the process.  Forty-six states, the District of Columbia, and five territories have been awarded rate review grant funds to make the rate review process stronger and more transparent.

These provisions have put an end to the days when insurance companies could raise health insurance premiums by double digit percentages with little oversight.  Because of rate review, the report released today shows that consumers have saved approximately $1.2 billion over the past year in the individual and small group markets.

This initiative is one of many in the health care law aimed at saving money for consumers and specifically works in conjunction with the 80/20 rule, which requires insurance companies to spend at least 80 percent of premiums on health care or provide rebates to their customers, instead of overhead, administrative expenses. Thanks to the 80/20 rule, last year 77.8 million consumers saved an estimated $3.4 billion up front on their premiums as insurance companies operated more efficiently.  Insurance companies that did not meet the 80/20 rule provided nearly 8.5 million Americans with $500 million in rebates.