Consumers can expect rebates

Policyholders to receive average of $127 from insurers.

WASHINGTON — More than 3 million health insurance policyholders and thousands of employers will share $1.3 billion in rebates this year, thanks to President Barack Obama’s health care law, a nonpartisan research group said Thursday.

The rebates should average $127 for the people who get them.

The law requires insurance companies to spend at least 80 percent of the premiums they collect on medical care and quality improvement or return the difference to consumers and employers.

Although many large employer plans meet that standard, it’s the first time the government has imposed such a requirement on the entire health insurance industry.

“This is one of the most tangible benefits of the health reform law that consumers will have seen to date,” said Larry Levitt, an expert on private insurance with the Kaiser Family Foundation, which analyzed industry filings with state health insurance commissioners to produce its report. Kaiser is a nonpartisan information clearinghouse on the health care system.

Still, with employer coverage averaging about $5,400 a year for an individual and $15,100 for a family, $127 isn’t a lot of money. It amounts to 2 percent of an individual plan, and a little less than 1 percent of the family premium.

The insurance industry says consumers should take little comfort from the rebates because premiums are likely to go up overall as a result of new benefits and other requirements of the law.

“The net of all the requirements will be an increase in costs for consumers,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, an industry trade group.

“Given that health care costs are inherently unpredictable, it’s not surprising that some plans will be paying rebates to policyholders in certain markets,” he said.

But the Kaiser report said the rebate requirement may be acting as a brake on the industry, discouraging insurers from seeking big premium increases.

“The presence of these thresholds and the corresponding rebate requirement have provided an incentive for insurers to seek lower premium increases than they would have otherwise,” the report said. “This ‘sentinel’ effect on premiums has likely produced more savings for consumers and employers than the rebates themselves.”

The study found the largest rebates will go to consumers and employers in Texas ($186 million) and Florida ($149 million), where Govs. Rick Perry and Rick Scott have been among the staunchest opponents of the federal law.

Both states applied for waivers from the 80 percent requirement and were turned down. Hawaii is the only state in which insurers are not expected to issue a rebate.

Like everything else about the overhaul, the future of the rebates depends on whether the Supreme Court upholds the law in a decision expected by early summer.