Obamacare Would Make Insurance Companies Give Consumers Their $2 billion Back [View all]

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Obamacare Would Make Insurance Companies Give Consumers Their $2 billion Back

by Rachel Strohman

A recent report from the Commonwealth Fund predicts that, if the Medical Loss Ratio (MLR) provision of the Affordable Care Act had gone into effect in 2010, consumers would have gotten $2 billion back from insurance companies last year.

You read that right: Insurance companies would have given consumers a $2 billion refund. But what the heck is MLR? This wonky term simply means that insurers have to spend the majority of your premium dollars on health care and improving quality, instead of profits, advertising, or other administrative expenses.

Prior to the Affordable Care Act, in most states there was no system for making sure that the consumers' premiums actually went toward their health care expenses and not into the pockets of insurance company CEOs. Thanks to Obamacare, insurers must spend at least 80 percent of premium dollars on health care expenses. Any less than that, and they are required to send their customers a refund to make up the difference.

The Commonwealth Fund calculated that difference using data from 2010, one year before the MLR regulations took effect in January of 2011. Although consumers will not receive refunds from 2010, many will see checks in the mail this summer based on how insurance companies spent premium dollars in 2011.

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http://www.standupforhealthcare.org/blog/obamacare-would-make-insurance-companies-give-consumers-their-2-billion-back