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”

  1. CLH, “Bettykath- Socialism is restribution of wealth from those who have earned it (or simply been lucky, who cares) to those who haven’t.”

    “Socialism is an economic system characterised by social ownership and/or control of the means of production and cooperative management of the economy.” Nothing here about redistribution of wealth.

    And wealth doesn’t just go to those who “earned” it or been “lucky”. In most cases, most wealth goes to those who cheat or those who inherit it from those who cheat. An amazing thing is that those who get their wealth by cheating or by inheritance generally have the attitude that they are smarter and more deserving than those they cheated or whose parents didn’t cheat. They have the arrogance of privilege.

    Another source of wealth in this country: CEOs and those who serve them directly. In Japan the average CEO pay to the average worker pay is 11:1, in Germany it’s 12:1, France 15:1, and so on. In the US it’s 475:1.

    It isn’t socialism, which has become such a dirty word, maybe it’s just redistribution of wealth, a redistribution of ill-gotten gains. Many very hard-working people are living well below the poverty line and that is unconscionable. The 10% have far too much money and the rest of us pay for their wars and buy their overpriced products so they can make more money.

    1. Bettykath- Social control/ownership of means of production is exactly what it means to control wealth (re)distribution. True, socialism does not per se take from one individual and grant it to another- but control of “means of production” is by itself a control over wealth- and it is never used to reward hard work, only to reward a lack thereof. I’m not the most articulate when it comes to cleanly defined opinion pieces. But you argue it’s not socialism, it’s communism. Um… how well has that worked in the rest of the world? And the economies of Japan, France, Spain, et al, are in even worse shape than ours. Germany is in better shape, but they have a universal domestic work ethic that can pay for their social programs- until their export industry hits a rocky bump, and it will eventually, all economies do. I’m not for removal of all social nets. I am for limiting the creation of entitlement minded citizens. I’m not for poor people dying in the streets. I am for charities and private donations taking the place of government subsidies. (Why has no one taken the obvious solution to this- tax at a higher percentage for margins above 100k, and then offer a dollar for dollar credit, until it equates with current margins, for domestic charity contributions?) I’m not for the government deciding how much a CEO makes. I am for people who organize labor, and use the labor market place to force companies to their way of thinking (within reason, hint hint American Airlines). And people became wealthy by cheating? That would be a bit harsh of a characteristic of my parents (BTW, I’m about piss dirt poor. And no, my parents don’t give or share a dime with me, ever.) My dad grew up a dirt poor military brat, worked his tail off, started a company, sold it, started another, and was successful mainly because of his reputation for extreme openness and honesty (accountant). My mother grew up the daughter of an electrician, worked her way to a scholarship to med school, and became a doctor. While that is mere anecdotal evidence, the fact is that most people who obtain wealth do so through hard work, dedication, and honesty. They may not share the same morals as others, but try getting ahead with a complete lack of ethics (without getting caught anyway. I’m more than willing to admit there are plenty of wealthy scum, just as there are plenty of poor scum). People simply won’t deal with you. And as to “many hard working people are living below the poverty line” what poverty line are you referring to? I believe it’s currently between 11 and 12k per year. Which, if you work a minimum wage job around 30 hours per week, you will be above that threshold. Now, that doesn’t say that’s an ideal existence, or that there is enough wealth to go around. But I don’t know a whole heck of a lot of people below the poverty line who work at all. That doesn’t necessarily mean I think they are lazy or greedy, but the vast majority of people below the poverty line are there because of either disability or a criminal record. A few more are the result of extended unemployment and drug use (which do tend to go hand in hand). And again, get the hell out of Iraq and Afghanistan, US. They don’t want us there. They sure as hell don’t deserve, in any capacity, our treasure and our blood. They need to either be eliminated like roaches, or left the hell alone.

  2. Obama’s health care bill is built entirely around profit. It is a veritable shrine to profit; a Statue of Profligacy; of the rich, by the rich and for the rich.

    It is not government controlled. It is not government operated. All government does is play “Guido” and provide free collection services for the benefit of the insurance behemoths. The irony; the taxpayer pays to have his or her own government put the squeeze on him or her, year after year.

    What few actual services there are, pre-existing conditions etc, that have somehow made it through the butcher shop of our legislative branch, are bare bones minimal fig leafs and given the ruthless logic of profit, will be cut and gutted, not enhanced, over time.

  3. Dave S, I’m not sure if this has been channenged in the SCOTUS, but it probably should be. The government is allowed to regulate pricing and profits? In any case, Nixon tried wage and price controls and the outcome was a disaster.

  4. I read a few comments for and against this news. While I think Obamacare is a complete farce and should be ruled unconstitutional by the Supreme Court, I was not aware of this provision. This makes the law even worse, not only are you forced to buy insurance, but if the insurer doesnt spend 80% of its premiums on care they have to send a rebate? I guess the government should just mandate car insurance companies to do the same thing. This will either bankrupt insurers that are small and that cannot economically do this, making the market for insurance less competitive than it is now. Or as I read before companies will simply raise premiums enough to offset the cost of this obviously facist law. I know I will hear from socialists that this an acceptable role for govt, but on its face it a dangerous notion to allow govt to do this, as I said if this law isn’t thrown out, the govt will start doing this in other areas.

  5. Shano:Premiums have gone down by 5% in Massachusetts the past two years while mine seems to go up by double digits every year in Az.
    So, Romney care is better than the ‘free’ market (for me) obviously.

    Premiums have done anything BUT go down in Massachusetts. They put out bogus statistics on that all the time when in reality the scost of healthcare insurance in Massachusetts is absolutely skyrocketing.

    One of the nasty little tricks some of the insurance companies use (Blue Cross Blue Shield in our case) is to keep your policy going up each year until it hits a ceiling (in our case $1,700.00 per month for two) and then they suddenly stop offering that policy. You then get to choose from a list of available policies which are either stratospheric in price or in which the coverage has been reduced, significantly as the price gets in line with the policy that just ended. So you choose a cheaper one, and start all over paying a little less, but for much less coverage. Then, within a few months, you get your first nice hefty premium hike and before you know it (about one year) the price is right back up to where it was, 1700 in our case, only now your coverage doesn’t cover anywhere near as much.

    In effect, what the mandate does is simply provide fish in a barrel for the insurance companies to shoot at will.

    Shano also mentioned Switzerland. Switzerland not only requires that 95% of the money you pay in goes to health care related costs, but the most cursory Google search will reveal that it mandates and strictly enforces that insurance companies can NOT (repeat, NOT) make a profit on basic coverage plans.AND there is very tight, fully funded, fully implemented government control over price hikes.

    For those who are about to gush the establishment propaganda that our pathetic fiasco of a health care rip off will improve over time (how could it not with all the sharks we have swimming around in an ocean of ill gotten profits?), It should also be noted that in Switezerland, like here, the prevailing winds of political change are in favor of relaxing the regulations and allowing the Insurance companies to make more profit. I’ll give you three guesses as to why politicians there, like here, are slowly succumbing to the temptation to get re-elected by free money (opps — gave it away) provided kindly, not not too legally — and in fact perhaps not too kindly after all, by the insurance companies.

  6. CLH,
    This isn’t redistribution of money. This is making sure the insurance companies are using premium money for care.

  7. Leejcaroll, I want to clarify something from my previous comment. I’m not a fan of the ACA-not because I don’t think that medical coverage doesn’t need to be reformed, but because I disagree with the route used. I meant businesses, rather than idividual persons, have higher shares of medical costs as aggregate units (for example, companies with majority low income workers will tend to have higher heatlh care cost impacts on providers). So the method used, in the form of rebates, is kind of silly. Instead I would have that money directed into, say, shoring up medicaid. I am a fan of not being able to deny coverage based on pre existing conditions. But the rebates? That kind of action is simply buying votes. Not that the R. are any better. Stimulus checks anyone? RE Bettykath- Socialism is restribution of wealth from those who have earned it (or simply been lucky, who cares) to those who haven’t. So, it’s not so much this single provision of the plan that bugs me- it’s a consistent feature, after all. You were right when you said requiring people to pay for health insurance would mandate that the government control the margins and costs of that insurance. I just don’t think the government should have that control, period. They do a brilliant job of fucking up every single thing they touch. I frankly don’t actually care if someone else has health care coverage or not- health care is a commodity, which you can either afford, or you can’t. If you can’t afford it, tough. Billions of people around the world have no/inadequate health care coverage. Or food. Or clean water. Darwinism is a valid concept, even among a sapient species (although results are skewed by the ability to protect weaker members within that species, compared to more simple examples). What makes the US so special that just being here grants you some magical entitlement to someone else’s money? RE-Michael Murray-As far as Thailand’s health coverage goes, I couldn’t even find Thailand on a map. And I’ve actually been there. Hookers are nice, the rest of the country is a crap hole. Yay, you have socialized health coverage. What’s the average life expectancy there? Yeah, about five years less than here, which is wonderful. And that $40 represents what percentage of monthly income for the average Thailand citizen? A little above ten percent. Which equates to a ten percent tax, on top of all other taxes. Annual growth rate? 1.5 percent. There are companies in the US with a higher GDP. Working out real well for that country Although I would tend to agree that the wars in Iraq and Afghanistan are huge, wasted resource drains. I know, I fought in both countries. .

  8. “Rebates will average $127.” Most of that will go to employers, of course, and if American votes can be bought for $60-$127 then we are truely done as a functional democracy.

  9. Bron,
    The companies have to pay the rebates if they don’t meet the ratios. Unless the Supremes throw out the entire bill.

  10. Raff,
    Great catch. Single payer is the way to, but considering the alternative Obamacare was a good first step.

  11. Do not hold your breath!

    You’re all discounting the American Accounting Creativity, which, like Entropy, goes in one direction only: from my small pockets to the BIG pockets.

    Or, in plain words: Who will do the Accounting?

  12. If you don’t have insurance and have to start paying for insurance due to the upcoming mandate of the ACA or “Obamacare,” then I’m certain any cost of any potential rebate will be scheduled into the payments somehow in advance. So you will in a sense simply be giving the insurance companies extra money that you will be getting back. It is just that they will have it for a while and you won’t.

    We will have to see what the actual size of the rebates is. A billion dollars in rebates is not that much really when you start spreading it out over millions of policy holders.

    There are a number of excellent provisions in the legislation such as the no pre-existing conditions exclusion clause and and so forth. I tend to think the mandate to buy insurance was a gift to the insurance companies to counter all the benefits to the consumer.

    William Thien
    http://williamthien.wordpress.com
    Thousands read it. Thousands agree.

  13. Switzerland caps all profits at 5%, so their health insurance companies have to pay out 95%. One day we may get there…..

    Premiums have gone down by 5% in Massachusetts the past two years while mine seems to go up by double digits every year in Az.
    So, Romney care is better than the ‘free’ market (for me) obviously.

  14. Time magazine shilling for The Man. Imagine that.

    “They” also said that auto insurance premiums would be lowered whenever
    mandatory insurance went into effect. Mine has gone up, not down. Yours?

  15. I’ll take my 127 dollars and pay off someone’s illegal foreclosure (probably around 150,000.00) that neither Obama nor his DOJ have done anything about. Ya gotta know how to stretch a dollar these days.

    Another thing. What are these damn Insurance companies paying for if they are not even paying 80% into actual health care costs? Why are so many of them not following the law? Screw the pizza money, I just want the profligate bastards to provide decent health care rather than massive bonuses to mega ass holes.

  16. Great article, raff. These is so much misinformation about Obamacare. Actually, it touches upon nearly every aspect of healthcare.

  17. The Obama administration and the Democratic Party got walloped in the 2010 midterm elections in part because few tangible benefits had kicked in as a result of the Affordable Health Care Act, written for Senator Max Baucus by Liz Fowler, a corporate lobbyist and vice president of Wellpoint, Inc. Nonetheless, a rebate on health care premiums, no matter how long delayed, ought to work at least a little for President Obama and the Democratic Party — which accounts for the all bloody-murder-screaming we hear emanating from the Republican campaign sewer.

    Of course, President Obama will spend far more money killing nameless Muslims in the next six months than he will improving national health care in America, but that appears OK with the Democrats and Republicans who claim to represent what the American people truly want but just don’t know it yet.

  18. Gee, I wonder if my sister’s insurance company would have paid for her treatment instead of waiting until she was so sick nothing could be done. Six months of rejections, then when she enters the icu with no hope of recovery, they approved her care. Bastards.

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