The Affordable Care Act (Obmacare) just keeps proving that its name is accurate.

The story below from Bill Poovey of reports that South Carolina health insurance companies have refunded to policyholders $19.6 million in 2011 premiums, $6.2 million in 2012 premiums and now $13.1 million for 2013 premiums.

Obamacare required insurance companies to use 80% of premiums collected for actual healthcare.  Prior to this some companies were using up to 50% of premiums for other things including profit.

While, as my friend Lynn Baily points out in the story, the average premium refund is relatively small compared to total premium paid, it is still money back in the consumer’s pocket and not in the insurance company’s pocket.  Which would you prefer?

The Affordable Care Act….making health insurance more affordable for the past 3 years and into the future.


Health care insurers owe South Carolinians $13.1M

By Bill Poovey
Columbia Regional Business Journal
Aug. 20, 2014

Rebates that health insurers must pay for failing to spend at least 80% of premium revenues on care for S.C. patients show the insurers’ actuaries slightly missed their marks in predicting costs, not intentional rule breaking, a health care economic analyst said.

Eleven insurers have been directed to refund a total of more than $13 million to 205,229 consumers insured in the individual and small-group markets in South Carolina.

11 insurers owe rebates in S.C.:

  • BlueChoice HealthPlan of South Carolina Inc., $1.2 million
  • BlueCross and BlueShield of South Carolina, $6.3 million
  • Coventry Health Care of the Carolinas, $2 million
  • Freedom Life Insurance Company of America, $82,321
  • Golden Rule Insurance Co., $2.7 million
  • John Alden Life Insurance Co., $38,417
  • Mid-West National Life Insurance Company of Tennessee, $144,056
  • National Foundation Life Insurance Co., $135,634
  • Standard Security Life Insurance Company of New York, $71,652
  • The United States Life Ins. Co. in the City of New York, $20,319
  • UnitedHealthcare Insurance Company of the River Valley, $79,822

Created through the Affordable Care Act, the medical loss ratio rule requires insurers to spend at least 80% of premium dollars on patient care and quality improvement. If insurers spend an excessive amount on profits and red tape, they owe a refund back to consumers, a U.S. Department of Health and Human Services statement said.

“It means the actuaries were off. That’s all it means,” said Lynn Bailey, an independent consultant in Columbia. “When you look at the fact that average per capita health expenditures annually are close to $9,000 now, to get $150 back? In the grand scheme of things actuaries have an incredibly tough job. They have to look at a pool of people and they have to estimate what — based on age, gender and geographic location — what that slice of people” will cost on an annual basis.

“Hey, they were off by 3%. Not a bad batting average,” Bailey said.

In 2012, insurance companies were required to refund $6.2 million to South Carolinians, down from $19.6 million in 2011.

The refunds can be provided to consumers in mailed checks, premium account reimbursements, reduced future premium payments or improved health coverage.

Health and Human Services Secretary Sylvia M. Burwell said consumers nationally have saved a total of $9 billion on their health insurance premiums since 2011 as a result of the Affordable Care Act.

Burwell said the government is continuing to work on “building a sustainable long-term system, and provisions such as the 80-20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long term.”

The federal report shows that last year alone, consumers nationwide saved $3.8 billion up front on their premiums as insurance companies operated more efficiently. Additionally, consumers nationwide will save $330 million in refunds, with 6.8 million consumers due to receive an average refund benefit of $80 per family. This standard and other Affordable Care Act standards contributed to consumers saving approximately $4.1 billion on premiums in 2013, for a total of $9 billion in savings since the medical loss ratio program’s inception, a Health and Human Services statement said.

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