MADISON, Wis., June 22 -- The Wisconsin Office of the Commissioner of Insurance issued the following news release:
On June 21, 2012, Health and Human Services (HHS) Secretary Kathleen Sebelius announced that 282,812 Wisconsinites will be receiving a total of $10,369,793 in rebates under the medical loss ratio requirement of the Patient Protection and Affordable Care Act (PPACA). This represents an average of $76 per person and is well below the national average of $151. The total figure reflects 0.15% of Wisconsin's total premium volume ($7.2 billion in written premium to $10 million in rebates).
"Our lower than average rebates are good news," said Deputy Insurance Commissioner Dan Schwartzer. "It shows that consumers weren't overpaying, our insurers do a good job at predicting their costs, and that our rate review process works. If our rate review process didn't work--as some have claimed--we'd see the big rebate numbers other states are seeing."
The rebate calculation is based on a PPACA provision that requires all health insurers to meet a specific medical loss ratio. In its simplest terms, a medical loss ratio is the ratio between medical expenses and administrative expenses paid by a health insurer. If the loss ratio exceeds the specific threshold in a given year, the insurer may be required to issue a rebate.
It is important to note that only 19,759 consumers in Wisconsin will be receiving a rebate. Most rebates will be issued to the employer who sponsored the health plan. The rebates may be issued in a variety of ways including a check or a discount on future premium.
"It is very important that consumers be careful about planning for those checks," continued Schwartzer. "The Supreme Court has yet to rule on many aspects of PPACA. If the law is ruled unconstitutional, those checks may not be issued. If the law is not struck down, health insurance rates are expected to rise significantly as many of the PPACA provisions are implemented."
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