Insurance Companies to Pay $1 billion to Consumers, Businesses - Beckley, Bluefield & Lewisburg News, Weather, Sports

Consumers and businesses will save more than $1 billion from insurance company rebates, according to a recently released report.

Sen. Jay Rockefeller, D-W.Va., chairman of the Senate Committee on Commerce, Science and Transportation, said in a news release that the savings comes from the minimum medical loss ration provision, also known as the 80/20 rule. That rule is considered one of the most important consumer protections in the Affordable Care Act, which encourages health companies to spend a larger portion of their customers' premium dollars on care by requiring companies to pay rebates if they spend less than 80 percent of their premium dollars on health care services.

"It's now clear that the minimum medical loss ration has been a huge win for customers," Rockefeller said. "Millions of American consumers and businesses will receive more than $1 billion in rebates over the next few months because their health insurance companies did not meet the medical loss ration targets in 2011. Millions more are benefiting because health insurance companies are spending less money on executive salaries and administrative costs and more on patient care and improving health care quality."

Health insurance companies have been submitting their mandatory financial filings with state insurance regulators for the past month. A preliminary review of these filings was released April 26 by the Kaiser Family Foundation, which estimated that health insurance companies will owe their individual and business customers at least $1.3 billion in rebates for calendar year 2011.

The Kaiser report estimates that health insurance companies operating in West Virginia will be required to pay $2.2 million in rebates, more than $1.4 million in the individual market and $774,000 in the small group market.

"The medical loss ratio law is putting money back into consumers' pockets and forcing the health insurance industry to put their customers ahead of profits," Rockefeller said.

In addition to rebates, the 80/20 rule has delivered savings to millions of American consumers through lower premiums. The Kaiser report noted that the rule "provided an incentive for insurers to seek lower premium increase than they would have otherwise, and in come cases premiums have decreased."

For example, in West Virginia, Highmark Blue Cross Blue Shield cut the December 2011 premiums it charged its 4,200 West Virginia consumers by 75 percent so it could make sure it met the 80 percent requirement, according to Rockefeller's office.