June 22--Under a provision of nation health reforms, nearly 114,000 Michigan families who buy their own health insurance or who have workplace coverage at small businesses will receive an average rebate of $214 no later than August 1 from 10 health insurers who spent too much on administration and salaries, the nation's top health official announced today.
-- PDF: Report breaks down rebates by state
The 10 insurers that must pay rebates include the large Aetna and Humana health plans. The amount of rebates they owe was not immediately available. The rebates do not apply to the Medicare program.
The information about health plan spending and rebates will be posted "in coming weeks" at www.healthcare.gov, said Mike Hash, director of the Office of Health Reform in the U.S. Department of Health and Human Services.
The two-year-old Affordable Care Act, a law under challenge by 26 states, including Michigan, requires insurers to spend at least 80 percent of the money they collect from consumers for monthly premiums on medical care and quality improvements. It's known as the 80-20 rule. The U.S. Supreme Court is expected to rule next week on the law, possibly as early as Monday.
Consumers in individual and workplace plans owed rebates will get them one of several ways:
A check in the mail.
A reimbursement into the account they use to pay premiums by credit or debit cards.
A reduction in future premiums.
Rebates in some states were much higher. For example, average rebates will be $807 in Vermont; $777 in Oregon; and $503 in Indiana.
Spokespersons for Humana and Aetna said the rebates they will pay are understandable given changes in the health care industry.
"Given the inherently unpredictable nature of health care costs and utilization, it's not surprising that Humana and other insurers will pay rebates in certain states and certain market segments, particularly in this first year" of the rebates as insurers "adjust to new payment and pricing requirements," the statement from Humana spokesman Jeff Blunt said.
Aetna spokeswoman Cynthia Michener attributed the insurer's higher administrative costs to the "unpredictable nature of medical costs and utilization" of services by consumers.
"We are continually improving our pricing so that we can continue to grow our business and avoid future rebates that add administrative costs and hassles for our members," her statement said.
An HHS media statement said that 62% of consumer insured in the individual market, 83% in the small business market and 89% in the large business market met the 80-20 rule that limited their administrative spending to accepted amounts.
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