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Health Insurance and Rebate Checks

Respectfully Submitted by Lawrence Rafferty (rafflaw)-Guest Blogger

I have to admit that I was not aware that the Affordable Care Act, or Obamacare, as its detractors call it, mandates that the insurance companies who don’t spend at least 80% of premium money on actual medical care expenses, must send rebates to policy holders.  “But the rebate provision of the law — the fruits of the so-called “80/20 rule” — is about to kick in big time, as millions of Americans receive rebate checks or premium reductions from insurance companies who have failed to spend enough on patient care. This cash could be a true game changer in public attitudes about whether the law actually is beneficial and good public policy. The rebate provision of the law has been known and discussed in health care policy circles for months, but has largely flown below the radar in the political world and for voters—until now.”  Time  

These rebates or premium reductions could not only be a big financial benefit to millions of policy holders, it could also be a big political boost for the Obama Administration in its attempts to convince the public of the many benefits provided by the Affordable Care Act (ACA).  Now that I know that the ACA will provide these rebates, just how much money are we talking about?  The Time Magazine article linked above quotes a Kaiser Family Foundation study that suggests that big dollars are involved here.  “This analysis looks at the latest estimates provided by insurers to state insurance commissioners.The analysis finds that consumers and businesses are expected to receive an estimated $1.3 billion by this August in rebates from health insurers who spent more on administrative expenses and profits than allowed by the ACA. The rebates include $541 million in the large employer market, $377 million in the small business market, and $426 million for those buying insurance on their own. Rebates in the group market will generally be provided to employers, and in some cases be passed on to employees as well.Rebates are expected to go to almost one-third (31%) of consumers in the individual market. Among employers, about one-quarter (28%) of the small group market and 19% of the large group market is projected to receive rebates. The share of consumers in the individual insurance market expected to receive rebates ranges from near zero in several states to as high as 86% in Oklahoma and 92% in Texas. “ KFF

$1.3 Billion dollars is a significant amount that will be soon heading to the pockets of millions of policy holders.  I was especially interested in the states like Texas and Oklahoma where almost every policy holder in the respective states will be receiving a rebate.  Would it be a fair question to ask what are Texas and Oklahoma not doing to protect its citizens from insurance companies who may be pocketing more money and providing less care per health care dollar?

The ACA is a complicated law and it wasn’t the single payer plan that I was hoping and working for, but it has already helped millions by mandating that children can stay on Mom and Dad’s policies longer and by protecting patients from being denied coverage for pre-existing health issues.  Now that the 80/20 rule rebates are about to kick in, millions more people will feel a real benefit in their pocketbooks thanks to the ACA.  Now, if we can just get the Supreme Court to forget its partisan ways, maybe all of us can begin to benefit from the Affordable Care Act. What do you think of the Affordable Care Act and the 80/20 requirement?  Will the rebate checks and premium reductions mandated by the bill have an impact on people’s lives and their opinions of the Act?  If you have time on this beautiful Mother’s Day, let us know what you think.  By the way, Happy Mothers Day!

Additional source:  Raw Story

Link to the full Act:  Health Care.Gov

59 thoughts on “Health Insurance and Rebate Checks”

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  4. These rebates started last year. The media has been out to lunch and lax about all the good things that ACA has in its basket. It’s a needlessly complex legislation that should be replaced with single payer, but its a start in that direction…I hope.

  5. The government should pass laws telling other businesses how to allocate their capital and make those companies also pay rebates to their customers. Private businesses shouldn’t be able to do whatever they want with my money

  6. How will we know if our insurance company is on the list to send rebates?

  8. CLH,

    The government’s definition of poverty is based on total income received. For example, the poverty level for 2011 was set at $22,350 (total yearly income) for a family of four. Most Americans (58.5%) will spend at least one year below the poverty line at some point between ages 25 and 75.

    This amount assumes a 40 hour week, 52 weeks a year at $10.75/hr. So everyone who has a job or two or three in order to get in their 40 hours, well, they’re probably paid minimum wage of $7.25/hr or maybe a bit more since some states have a slightly higher minimum wage. With 30 hrs per week they need to be making $14.33/hr.

    So, my statement stands: many hard-working people are below the poverty line.

    I accept your statement that there are many qualified people below the poverty line because the jobs aren’t there and there are many people below the poverty line who are disabled or otherwise unable to work.

    Lots of hiring signs are up in retail establishments which are well-known for minimum wages and limited (20/week) hours. Just an observation.

  10. CLH,
    Let’s see some evidence to prove your claim that most people below the poverty line are either disabled or have a criminal record! I do not believe it. The economy has wrecked many lives and loss of employment has put many below the poverty line.

    1. rafflaw- I can’t, actually. My evidence is only anecdotal. I am lower middle class. I have lived below the poverty line (thankfully, only for about a year or so.) I have been homeless. (Again, only briefly, for about three months where I stayed at a shelter, then at a hospital. It was right after I left the military- my head was not quite right, mainly due to some pretty nasty side effects from medication and some TBI.) I talked to many, many people where I stayed. And I live in a community where multiple families residing in a single house is common. I rent a room at a house where I have four other room mates, two of which are on disability, and one of whom is a convicted felon who should be on disability but can’t due to said conviction. They all share something in common in my area- history of crime, mental disorder, or physical disability, and often a mixture of all the above. Please note that I don’t think any of these things should be a reason someone has to exist below the poverty line- and I was not, in general, referring to the unemployed. I was just objecting, I think, to the comment that many “hard working people” exist below the poverty line. I think it should have been written “There are a lot of people, who would otherwise be gainfully employed were there enough jobs to go around, who live below the poverty line.” I wrote “not enough wealth to go around” where I meant to write “not enough jobs to go around”. And much of my arguments I’m presenting to myself as a bit of an anti-thesis anyway. Which, I hope, does create some kind of an explanation for why my comments are a bit schizophrenic. Like Obama, my views on many things are evolving, or shall I say, I haven’t actually come to a conclusion on most issues, mainly because I come from a diverse background. Wealthy parents, all white suburbia neighborhood, adopted siblings of a minority race, eight years in the military, a year basically not knowing where I would eat next following the military, followed by being gainfully employed in a lower income job (though not really anywhere near the poverty line), and graduating with a degree in ME from SMU this year. Anyway, I think I’ve gone a bit far afield from the original post- but thanks for the feedback and comments, I love your blog =b

  13. My brother has become disabled. He hasn’t been able to work for several years so has medicaid. Apparently there is a cap and he hit it with his physical therapy. He can no longer get the treatment that he needs so he can keep a part-time job and live independently.

  15. Health Insurers Required to Credit Obama When Sending Out Rebate Checks

    —By Kevin Drum
    | Mon May. 14, 2012 10:34 AM PDT Mother Jones

    It’s rebate time! One of the geekier aspects of Obamacare is that it allows insurance companies to spend no more than a maximum of 20% on overhead costs (15% for large group plans). The rest of your premium dollars have to be spent on actual healthcare. This part of the law went into effect on January 1, which means that starting soon, any insurance company that spends more than 20% on overhead has to send out rebates to customers.

    But here’s the election-year angle on this. Not only do insurance companies have to send out rebates to lots of people, they have to tell them exactly why they’re getting the rebates. Here are the first two sentences of the letter as mandated by HHS:

    This letter is to inform you that you will receive a rebate of a portion of your health insurance premiums. This rebate is required by the Affordable Care Act — the health reform law.

    The checks aren’t huge. The Kaiser Family Foundation estimates that individuals will receive an average of $127, though the average amount will be over $200 in some states. The average rebate in small and large group plans will be smaller, but a fair number of people will receive rebates over a hundred dollars.

    Does this matter? Maybe a little bit. I’d guess that it depends on whether the Obama campaign decides to make healthcare a significant talking point this year. If they do, this will have an effect. If they decide to duck the issue, it probably won’t.

  16. lol my back problems cost my insurance big time money. no rebates headed this way. However, isn’t the lack of spending on some people how insurance makes its money? I mean they are losing big time in my case. They would need 3-4 people to cover me. Then they want to make profit too.

  17. There was a quote from an NPR article on this issue upthread. The quote says, in part: “The law requires insurance companies to spend at least 80 percent of the premiums they collect on medical care and quality improvement”

    Who among us really believes for an instant that the insurers won’t game the hell out of this? I haven’t read the law on this point, but “quality improvement” can mean practically anything – such as expensive conventions in luxury resorts where the job creators among the insurance companies, and the upper echelons within each insurance company, can compare notes in extreme comfort on how to “improve quality” by screwing people in new ways. Remember, the anti-trust exemption was never repealed. Barry and Rahm made sure of that.

    So, until and unless I actually see some honest bookkeeping coming out of the insurance carriers – an impossibility IMHO – I am not going to hold my breath for any rebates. (I’m safely on Medicare, so I personally am not affected, but I care deeply for my children and the children of others. As we all should.)

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