Thursday, May 3, 2012
Blue Cross Blue Shield, UnitedHealthcare, Golden Rule Lead Expected Rebates
The top health insurance companies in Florida’s individual market expect to owe about $40 million policyholders, led by Golden Rule, which estimates it will pay about $15.7 million to more than 67,000 policyholders and Humana, which is anticipating $12.3 million to almost 45,000 policyholders of two affiliates.
In the small group market – where employers with fewer than 100 employees purchase coverage – the largest insurer, Blue Cross Blue Shield of Florida (now Florida Blue), expects to pay about $44.9 million in rebates to about 24,000 small businesses and other groups. The state’s second largest insurer, UnitedHealthcare, estimates rebates of almost $19.9 million to about 22,000 small groups.
“This report shows that the new MLR rule is beginning to improve value at some of Florida’s largest insurance companies,” said Sondra Roberto, staff attorney for Consumers Union. “The requirement is driving insurers to improve efficiency or plan for refunds.”
Enacted as part of the Affordable Care Act, also known as the health reform law, the new rule says that insurers must spend at least 80 percent of premiums on actual medical care for small businesses and individuals who buy coverage on their own. If insurers miss the mark, they must rebate policyholders the difference.
“Many are still struggling just to make ends meet so we are so pleased to see that small businesses and consumers will be able to put their hard-earned money back into their pockets,” said Laura Goodhue, Exectuive Director of Florida CHAIN. “Real progress has been made on behalf of consumers in ensuring that premiums go towards quality healthcare. We must continue down this path and make sure that we do not go back to the way things were before.”
The report also sheds light on how the MLR rule is delivering more value in health insurance for Florida consumers. In 2011, several insurers increased the portion of premium dollars that they spent on actual medical care, including efforts to improve the quality of care. For example, Connecticut General Life Insurance, part of Cigna, spent 64.4% of premiums on medical care in 2010 before the rule was in place. With the MLR rule in place in 2011, the insurer increased that spending to 74%.
In the past, when actual medical costs turned out lower than projected costs, insurers often could pocket the difference. With the MLR rule in place, insurers must give the money back to policyholders if actual medical costs fall below 80 percent of premium.
Additionally, there is evidence in Florida that the new higher MLR standard is leading some companies to trim rate increases as a result of the new MLR rule. Humana, for example, requested average rate reductions as high as 12 percent “in order to meet the 80 percent minimum loss ratio standard” for Florida individual market customers, according to the company’s rate filing.
A recent report by the Kaiser Family Foundation reported that total rebates for Florida across all insurers could be as high as approximately $49.7 million in the individual market and $65.3 million in the small group market. Total rebates, including individual, small and large group markets are estimated at $148.6 million.
The data for the insurance rebates are based on estimates provided by insurers in filings to the National Association of Insurance Commissioners in the 2011 Supplemental Healthcare Exhibits.
The full report is available at www.yourhealthsecurity.org.
Kara Kelber, 202-462-6262, or Leah Barber-Heinz, 813-777-7776
About Consumers Union
Founded in 1936, the nonprofit Consumer Reports has over 8 million subscribers to its magazine, website, and other publications. Its advocacy division, Consumers Union, works for health reform, food and product safety, financial reform, and other consumer issues in Washington, D.C., the states, and in the marketplace. Learn more at: www.consumersunion.org
About Florida CHAIN
Florida CHAIN is a statewide advocacy organization dedicated to improving the health of all Floridians by promoting access to quality, affordable healthcare. CHAIN stands for Community Health Action Information Network. www.floridachain.org