Dive Brief:
- Consumers received $470 million in rebates in 2014 under the Affordable Care Act's 80/20 rule, the Centers for Medicare and Medicaid Services (CMS) announced last week.
- The rule, also referred to as the Medical Loss Ratio, stipulates insurance companies must use a minimum of 80% of premium dollars on healthcare. If they fail to do so, the companies must either lower their premiums or remit a refund to consumers.
- According to CMS, the rule has saved consumers $2.4 billion since 2011.
Dive Insight:
Most of the savings were realized by consumers in individual or small group plans. Since 2011, the percent of enrollees covered by insurance companies fulfilling the 80/20 rule has steadily increased. In 2014, 6.8 million people were insured in plans which owed refunds, compared to 5.5 million this year. At the same time, the total amount of refunds issued has fallen since 2011 when $1.29 billion was issued.
Large group plans have more stringent standards, as companies must use 85% of premium dollars for patient healthcare. Both the 80% and 85% spending standards are based on how an insurance company spends the aggregate premiums of enrollees in one state, rather than on a per-enrollee basis.