A study released today confirms that a provision authored by U.S. Sen. Al Franken and passed as part of the Affordable Care Act will save millions of consumers billions of dollars. Sen. Franken's Medical Loss Ratio (MLR) provision requires health insurers to spend at least 80-85 percent of what they collect in premiums on actual health services for their customers, as opposed to administrative costs, profits, or CEO salaries.
The study, released by the non-partisan Commonwealth Fund, estimates that had Sen. Franken's Medical Loss Ratio (MLR) law been in place since 2010 the average Minnesotan would get $266 back from their insurance company this year. Nationally, consumers would have received rebates of nearly $2 billion. The estimates offer a prediction of what consumers may expect to see this August when insurers are required to issue rebates if they have not met the new MLR thresholds. According to the study, insurers will either be motivated to reduce rates or expand medical coverage to avoid rebates.
"Over a million Minnesotans have already been helped by health care reform and the law hasn't even been fully implemented yet," said Sen. Franken. "While this new report confirms that my Medical Loss Ratio provision will save consumers money, the provision will also improve the quality of the health care that people receive. That's what I call a win-win."
Sen. Franken authored the MLR provision during the debate on health care reform. It was inspired by Minnesota's long-standing medical loss ratio law and its non-profit health insurers, which lead the nation in keeping administrative costs low.
You can read a copy of the Commonwealth Fund's Estimating the Impact of the Medical Loss Ratio Rule: A State-by-State Analysis.