Senator Jay Rockefeller, chairman of the Senate Finance Subcommittee on Health Care, today lauded the savings that West Virginians are receiving from their health insurance companies. The savings stem from a provision that Rockefeller worked to include in the Affordable Care Act, which is considered one of the most important consumer protections in the health care law.
Rockefeller's minimum medical loss ratio (MLR), also known as the "80/20" rule, has so far required insurance companies to return more than $1.5 billion to consumers - and billions more in estimated savings have been passed to consumers from a more efficient healthcare industry. The law encourages health insurance 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% of premium dollars on health care services.
"Making sure those who are less fortunate get the help they need is the cornerstone of the health care law, and MLR is the centerpiece of that effort, in many ways, by curbing the worst possible insurance company abuses," Rockefeller said. "It's important to make sure insurance companies are spending subscriber dollars on care, not on fancy buildings for executives, and already West Virginians are benefitting from these common-sense provisions."
Building on his efforts to increase consumer protections in health care, Rockefeller also introduced legislation that would create a MLR which encourages insurance companies to spend more Medicaid dollars on actual medical care instead of marketing, executive compensation and other non-medical expenses. Currently, some states like California are moving their entire Medicaid population into Managed Care where consumers do not have the same protections offered in Medicare
Advantage and the new Health Care Marketplace.
Rockefeller believes consumers that rely on Medicaid - whether they are in Medicaid or Managed Care - deserve the same safeguards they would have under Medicaid. Rockefeller's Medicaid MLR bill would make sure insurers have to provide real patient care or return money to taxpayers. The Senator plans to introduce the legislation as an amendment during the Senate's consideration of the SGR Repeal and Medicare Beneficiary Access Improvement Act of 2013, which was passed by the Finance Committee last week.
In fall 2012, many West Virginians who were overcharged for their health insurance began receiving rebates totaling about $2.7 million statewide. This year alone, more than 16,000 West Virginians with private insurance coverage should receive rebates, averaging $374 per family. Those rebates can be in the form of reduced premiums, or even a check.
In addition to these rebates, the 80/20 rule has delivered savings to millions more American consumers through lower premiums. A preliminary review by the Kaiser Family Foundation estimates that health insurance companies will owe their individual and business customers at least $1.3 billion in rebates for the calendar year 2011. As the Kaiser report notes, the 80/20 rule "provided an incentive for insurers to seek lower premium increases than they would have otherwise, and in some cases premiums have decreased." In West Virginia, for example, Highmark Blue Cross Blue Shield cut the December 2011 premiums it charged its 4,200 West Virginia small business customers by 75%, which cover 39,000 West Virginians.
That saved those small businesses an average of $2,500 in health insurance premiums for the year.