A new report from the Center for Medicare and Medicaid Services shows that because of a provision in the health reform law authored by U.S. Sen. Al Franken (D-Minn.), almost 125,000 Minnesotans will receive rebates - averaging $160 - from their health insurance providers. 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, marketing, or CEO salaries. Insurance companies that did not meet this threshold for 2011 must rebate their policy holders no later than August 1, 2012.
"This is great news for consumers, who will no longer have to foot the bill for the excessive spending of their health insurance company. Before my medical loss ratio provision was implemented, far too many of the health insurance premium dollars that Americans paid went to things like executive bonuses, marketing, and administrative costs-not to actual health care. But because of my provision in the health reform law, insurance companies are now forced to spend a higher percentage of premium dollars on health care, or provide refunds when customers are overcharged. And today we learned that because of that provision, more than 100,000 Minnesotans - and millions more across the country - will be receiving a check from their insurance company of an average of about $150."
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 the state's non-profit health insurers, which lead the nation in keeping administrative costs low. Under the MLR provision, large group health insurers are required to spend at least 85 percent of what they collect in premiums on actual health services. Small group and individual market insurers are required to spend at least 80 percent.