* Health insurer refunds drop by half in 2012 vs 2011
* Government says insurers are reining in premiums
* Each family to receive average of $100 back
June 20 U.S. insurers will pay $500 million in
rebates to employers and individuals this summer because of
President Barack Obama's healthcare law, about half the amount
they paid last year.
The law, often called Obamacare, requires companies to
refund customers when they spend less than 80 percent of
premiums they collect on medical care.
The Department of Health and Human Services attributed the
decline in rebates to insurers' adhering more closely to this
requirement and to lowering premium rates for their products.
The government agency said on Thursday that 8.5 million
insurance customers would receive an average rebate of about
$100 per family after August 1. For 2011, 4.1 million people
received about $152 per family, or a total of $1.1 billion.
The Affordable Care Act goes into full effect on Jan. 1,
2014, when an expansion of the Medicaid health plan for the poor
and subsidized state health exchanges take hold. In recent
weeks, states have begun publishing premiums for new insurance
products for those exchanges.
The Medical Loss Ratio, or MLR, portion of the law was first
applied in full in 2011 and limits spending on administrative
costs, salaries and bonuses.
Gary Cohen, deputy administrator at the Centers for Medicare
and Medicaid Services, said that the insurers were paying fewer
rebates in 2012 than in 2011 because they were more strictly
following the law and charging lower premiums.
The centers also said the MLR rule, a new insurance rate
review process that requires rate increases of more than 10
percent to be reviewed, and competition had contributed to a
savings of $3.4 billion among 77.8 million people due to lower
spending on premiums last year.
Cohen said other market forces could be contributing to the
lower premiums. Growth in healthcare spending has slowed during
recent years as consumers have cut back on doctors' services and
the trend is forecast to continue.
"As they've adjusted their prices to the new rule, as
they've become more efficient and more cost effective, two
things happen: the number of rebates goes down and the
corresponding amount of premium that people have to pay for the
value they are getting for insurance comes down as well," Cohen
said during a telephone briefing with reporters.
Aetna Inc, the third-largest U.S. insurer, said that
MLR rebates represent 0.2 percent of the premiums it collected
"We are delivering savings to our customers through
competitive pricing, rather than waiting for a rebate check,"
Aetna spokeswoman Cynthia Michener said in statement.