When is the last time you heard about a health insurance company lowering instead of raising premiums for its customers? Chances are never, but now – thanks to the Affordable Care Act – 15,000 Aetna customers in Connecticut will see their health insurance premiums drop by up to 19.5 percent later this year.
Aetna wants to lower premiums on those customers who buy their own policies in an effort to meet the law’s new requirement that insurance companies spend at least 80 percent of premium dollars on medical care (or 85 percent for those who get their coverage through a large employer). If insurers spend less than the minimum amount in a year, they will need to give rebates to customers to make up the difference.
Consumers can expect to see more insurers lowering premiums on some plans or implementing smaller rate increases as this new rule kicks in. The goal of the requirement, referred to as the medical loss ratio or “MLR” rule, is to rein in administrative expenses and profits and drive insurers to provide more efficient, quality coverage.
The U.S. Department of Health and Human Services estimates that 9 million people nationwide will be eligible for up to $1.4 billion in rebates starting in 2012 due to the MLR rule.
Unfortunately, just as consumers are beginning to feel the benefits of this reform in their pocketbooks, some members of Congress, state insurance commissioners, and insurance industry brokers want to change the rule to make it less effective.
Right now, broker commissions, which typically make up a sizeable chunk of an insurer’s administrative expenses, are included in the percentage that insurers can spend on administration and profits. But legislation in Congress (HR 1206) would remove broker commissions from the equation, meaning that less of your premium dollars will actually go toward medical care The National Association of Insurance Commissioners, whose decision could greatly influence Congress, is debating whether to support the legislation and is expected to decide the issue within the next month.
In addition, several states, including Maine, New Hampshire, Nevada, Florida and Georgia, have applied to get a temporary waiver from the MLR requirement for insurers operating in their state.
Congress and the states shouldn’t gut this new rule just as it is beginning to show real results for consumers. We’ll be fighting to keep this rule in place, and we will ask you to join us as we work to make sure you get a fair shake on health insurance rates.