Georgia consumers will qualify for an estimated $30 million in health insurance rebates this year due to a newly implemented provision in the federal...

Georgia consumers will qualify for an estimated $30 million in health insurance rebates this year due to a newly implemented provision in the federal health reform law, according to an analysis released Thursday.

Nationwide, health insurers will have to pay an estimated $1.3 billion in rebates, said the report by the Kaiser Family Foundation.

Under the 2010 law, officially called the Affordable Care Act, insurers in a state are required to spend at least 80 percent of premium dollars on medical care costs, or pay rebates to consumers.

The U.S. Department of Health and Human Services, though, allowed Georgia health insurers to meet that level gradually for individual health policies, with a 70 percent mark in 2011, 75 percent in 2012 and 80 percent in 2013.

Insurance companies will be required to issue rebates by August if they did not meet those spending levels last year.

The Kaiser report said that 109,776 people in Georgia with individual plans will get rebates totaling $3.9 million, averaging $35.12 per enrollee. Almost one in three Georgians in individual plans will get rebates.

The Georgia rebate estimate for small-business health plans is $13.4 million for 217,653 individuals, averaging $61.49 each; and for larger employer plans, $13.2 million will be divided among 365,960 enrollees, or $36 per enrollee on average.

The data in the Kaiser Family Foundation report are based on preliminary estimates from insurers as reported to state insurance departments. Actual rebate amounts will likely vary, the report said.

In some cases, consumers or employers may receive their rebates in the form of a discount on future premiums, rather than a check.

Rebates for group or employer plans will generally be provided to employers, and in some cases be passed on to employees as well, the report said.

The rebate rule went into effect in January 2011. It does not apply to health plans offered by self-insured employers.

The insurers with the biggest estimated rebates in Georgia are Humana Employers Health Plan, with a total of $6.6 million; UnitedHealthcare, at $6.5 million; and Coventry with $6.1 million.

Other health plans  estimating they will pay rebates in the state are Kaiser Foundation Health Plan, Connecticut General Life, World Insurance Company, John Alden Life Insurance, Mid West National Life Insurance of Tennessee, Blue Cross and Blue Shield of Georgia, Humana Insurance Co., Aetna, and Companion Life, whose projected rebate total is $10.

State Insurance Commissioner Ralph Hudgens, an opponent of the health reform law, issued a statement on the rebates Friday.

“In this economy I am certain individuals and companies will be pleased with any amount of rebate they may receive,’’ Hudgens said. “Unfortunately, when these rebates are put in the context of the impact President Obama’s ‘’Affordable Care Act” has on health care and health insurance, the future is bleak. “

Hudgens cited estimates that the net cost for health insurance will increase sharply because of the 2010 legislation, and a projection that many employers will drop insurance coverage once the law takes full effect.

Becker’s Hospital Review reported that nationwide, eight of the largest publicly traded insurers will pay roughly $850 million. UnitedHealth Group will have to pay the most of any insurer, at $307 million. Aetna and WellPoint will pay about $177 million and $94 million, respectively, while the non-profit Blue Cross and Blue Shield plans will owe about $250 million.

 

Effects on companies will vary

Whether the rebate provision will remain in force is unclear. Georgia and 25 other states have sued over the Affordable Care Act, claiming it is unconstitutional. The U.S. Supreme Court will decide the issue soon, and it could uphold the law, void it entirely, or throw out parts of it and preserve others.

Cindy Zeldin of the consumer advocacy group Georgians for a Healthy Future said Thursday that the reform provision on ‘‘medical loss ratios’’ is intended to increase transparency, value and accountability in the health insurance market.

“You want insurance companies to meet the targets,’’ she said. “If they don’t, consumers get rebates.’’

The loss ratio is part of several consumer-friendly insurance reforms in the Affordable Care Act, she said.

America’s Health Insurance Plans, an industry trade group, said the spending rule could have unintended consequences, potentially causing some insurers to withdraw from certain markets, Kaiser Health News reported.

“Moreover, the taxes, benefit mandates and other regulations in the health care reform law will cause premium increases that far exceed the value of any prospective rebates,” the group said in a statement.

Ana Gupte, a health industry analyst at Sanford Bernstein, told Kaiser Health News that insurers in some markets reduced premiums to avoid paying rebates, but others risked having to pay because they didn’t want to underprice their policies.

Some insurers may have miscalculated –- and thus owe a refund –- because unexpectedly low utilization of health care kept their medical costs below projections, she said.

Jeff DiSantis, Georgia state coordinator for Know Your Care, an organization promoting health care reform, said in a statement, “This sort of rebate would have been unheard of a few years back, but thanks to the president’s Affordable Care Act, we can now come to expect this sort of transparency and consumer protection.’’

Health industry consultant Robert Laszewski downplayed the change, telling Kaiser Health News that the projected rebates are so small as to count mainly as a “rounding error” that most consumers won’t even notice.

 


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Andy Miller

Andy Miller is editor and CEO of Georgia Health News

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