The Commercial Appeal

Tenn. to benefit from insurance rebates

Health care reform bringing $5.6 million to consumers

- By Kevin Mckenzie

Rebates totaling more than $5.6 million will begin flowing to thousands of Tennesseea­ns in August from health insurance companies in one of the latest signs of how federal health care reform is squeezing costs.

Nationwide, consumers will receive $500 million in 2012 rebates required by a federal Affordable Care Act regulation known as the “80/20” or “medi- cal loss ratio” rule. That’s a dramatic drop from $1.1 billion in rebates for 2011 and a sign that consumers are getting more value while insurers are operating more cost effectivel­y, federal officials said.

Insurers must spend at least 80 percent of premiums they receive for individual and smallgroup health insurance, and 85 percent for large-group coverage (more than 100 employees) directly on medical care or improving the quality of care. If they fall short, they must rebate that amount of premiums to consumers.

In a conference call with reporters last week, Gary Cohen, Centers for Medicare & Medicaid Services deputy administra­tor and director of the Center for Consumer Informatio­n and Insurance Oversight, called the rule a vital tool to help keep con- sumer costs down.

For insurers, “if they spend an excessive amount on profits and red tape, they owe rebates back to consumers,” Cohen said.

Cohen and other government officials contend that the 80/20 rule and other Affordable Care Act programs in 2012 saved consumers in the individual, smallgroup and large-group insurance markets $3.4 billion in upfront premium costs.

Earlier this month, BlueCross BlueShield of Tennessee announced that it has met the government targets in 2012 for all three categories — with 83.1 percent for individual­s, 80.2 percent for small group and 89.1 percent for large group — and won’t be issuing rebates.

“We have a continuing commitment to control costs on all fronts and to improve the quality of care received by our members as well as their over-

all health,” Calvin Anderson, BlueCross senior vice president and chief of staff, said in a statement.

BlueCross cited requiremen­ts of the Affordable Care Act, including the 80/20 rule, when it announced plans last October to lay off about 100 employees. The state’s largest health insurer reported a pretax profit margin of 3 percent in 2012.

Thirteen other health insurers will provide rebates averaging $69 for nearly 132,000 consumers in Tennessee, according to federal data. In Arkansas, six insurers will provide rebates totaling about $ 3.5 million, averaging $49, for more than 121,000 consumers. In Mississipp­i, seven insurers will rebate a total of $5.85 million, averaging $140, for about 60,000 consumers.

Rebates can come in four ways: checks sent in the mail; reimbursem­ent to an account used to pay for insurance; a reduction in next year’s premium, or to an employer to be used for the employee’s benefit.

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