OR WAIT null SECS
KFF analysis shows group segments remain steady while individual segment moves into compliance
More than $2 billion in consumer payments were driven out of the healthcare system last year through medical-loss-ratio (MLR) rebates and premium reductions. Early estimates indicate consumer savings for 2013 will total $571 million, according to the Kaiser Family Foundation (KFF).
The KFF analysis looks at the basic proportion of premiums plans paid out before and after the 80% and 85% MLR provisions went into effect. Weighted average traditional MLRs for the large group and small markets over the past three years remained steady, and most group plans were already meeting the threshold prior to the provision.
The individual segment MLRs, however, rose from 78% in 2010 to 83% in 2012, which indicates that the rule is having the effect desired by regulators. In other words, individual plans are spending more on medical care and less on administration.
MLR provisions went into effect in 2011. Since then, plans are expected to spend 80% of premiums in the small group and individual market on medical care and 85% in the large group market.
For example, in Tennesee alone, Cigna must issue rebates of $92,967 to large group customers and UnitedHealthcare will write checks for more than $1 million for individual policyholders because the insurers failed to reach the prescribed MLRs. Rebates must be issued by August 1.