June 22--Consumers and employers in Wisconsin will receive $10.4 million in rebates in August from health insurers who did not meet the new federal requirement that they spend a minimum percentage of premiums on medical claims and quality initiatives, the U.S. Department of Health and Human Services announced Thursday.
The Affordable Care Act, the health care reform law, requires health insurers to spend 80% of premiums for policies sold to individuals and small employers and 85% of premiums for policies sold to large employers on medical claims and quality initiatives.
Small employers eligible for the rebates in Wisconsin will receive $2.9 million in rebates while large employers will receive $6.8 million, according to the Department of Health and Human Services.
Individuals and families who buy health insurance on their own will receive $649,028, an average of $63 for each family covered by one of the health plans that did not meet the new requirement.
The health plans that are required to issue rebates to individuals and families in Wisconsin cover 19,759 people.
The $10.4 million in rebates work out to a fraction of 1% of the roughly $7.2 billion in premiums paid to health insurers in Wisconsin, according to the Wisconsin Office of the Commissioner of Insurance.
Few health insurers in Wisconsin were expected to bump up against the new requirement. None of the major health insurers based in the state, for example, had to issue rebates to consumers.
Wisconsin has one of the most competitive markets in the country for insurance sold to individuals and their families, according to a study last year by the Kaiser Family Foundation, a health-policy research organization. It also is one of the most competitive markets for insurance sold to small employers.
But Bobby Peterson, a lawyer with ABC for Health, a public interest law firm based in Madison, said the requirement is one of several provisions in the health care reform law to help protect consumers.
"Returning money to consumers is a way of trimming a little bit of the fat out of the health care system," Peterson said. "There's still a long way to go."
The new requirement that health insurers spend a minimum percentage of premiums on medical claims also is affecting how health insurers set prices, Peterson said.
"They knew it was coming," he said, "so the fact that they still have to give money back is telling."
Small employers entitled to rebates in Wisconsin will receive an average of $48 for each family receiving health benefits, according to the Department of Health and Human Services. The health plans required to issue rebates for small employers cover 122,516 people in the state.
Large employers in Wisconsin will receive an average of $104 for each family receiving health benefits. The plans in the state that are required to issue rebates for large employers cover 140,537 people.
Most large employers self-insure, paying most of the medical claims of employees and their families.
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