Report: Rebates from Obamacare health care law will top $1 billion
WASHINGTON — More than 3 million health insurance policyholders and thousands of employers will share $1.3 billion in rebates this year, thanks to President Barack Obama's health care law, a nonpartisan research group said Thursday.
The rebates should average $127 for the people who get them, and Democrats are hoping they'll send an election-year message that Obama's much-criticized health care overhaul is starting to pay dividends for consumers. Critics of the law call that wishful thinking.
The law requires insurance companies to spend at least 80 percent of the premiums they collect on medical care and quality improvement or return the difference to consumers and employers. Although many large employer plans already meet that standard, it's the first time the government has imposed such a requirement on the entire health insurance industry.
"This is one of the most tangible benefits of the health reform law that consumers will have seen to date," said Larry Levitt, an expert on private insurance with the Kaiser Family Foundation, which analyzed industry filings with state health insurance commissioners to produce its report. Kaiser is a nonpartisan information clearinghouse on the nation's health care system.
Still, health insurance is expensive, and $127 may not even pay a month's worth of premiums for single coverage.
And the insurance industry says consumers should take little comfort from the rebates because premiums are likely to go up overall as a result of new benefits and other requirements of the law.
"The net of all the requirements will be an increase in costs for consumers," said Robert Zirkelbach, spokesman for America's Health Insurance Plans, the main industry trade group.
"Given that health care costs are inherently unpredictable, it's not surprising that some plans will be paying rebates to policyholders in certain markets," Zirkelbach added.
But the Kaiser report said the rebate requirement may be acting as a brake on the industry, discouraging insurers from seeking big premium increases to avoid having to issue refunds later and face possible criticism.
The new law has "provided an incentive for insurers to seek lower premium increases than they would have otherwise," the report said. "This 'sentinel' effect on premiums has likely produced more savings for consumers and employers than the rebates themselves."
The study found the largest rebates will go to consumers and employers in Texas ($186 million) and Florida ($149 million), where Govs. Rick Perry and Rick Scott have been among the staunchest opponents of the federal law. Both states applied for waivers from the 80 percent requirement and were turned down. Hawaii is the only state in which insurers are not expected to issue a rebate.
Here's how the rebates break down nationally:
More than 3 million individual policyholders will reap rebates of $426 million, averaging $127 apiece. These are consumers who are not covered through an employer and buy their policy directly. Consumers in Texas, Oklahoma, South Carolina and Arizona are most likely to be eligible.
Insurance companies must notify policyholders, and the rebates are due by Aug. 1. Some companies have already begun to pay.
In the small-employer market, plans covering nearly 5 million people will receive rebates totaling $377 million.
Employers do not have to pass their rebates on to workers, and can also take them as a discount on next year's premiums.
Insurers serving large employers face a stiffer requirement. Under the law, they must spend 85 percent of premiums on medical costs. The study found that 125 plans covering 7.5 million people at large employers will give back a total of $541 million.
Most plans operated by major national employers are exempt from the requirement. The biggest companies usually set aside money to cover most of their workers' medical expenses. Typically they hire an insurer to administer their plan, but they do not buy full coverage from the insurer.
Separately, a Goldman Sachs report estimated insurers would pay rebates of $1.2 billion. Among major insurers, UnitedHealth would pay $307 million, Aetna $177 million, WellPoint $94 million and Coventry $50 million.
Supporters of the requirement say it will keep insures from padding their profits at the expense of unsuspecting consumers.
"Millions are benefiting because health insurance companies are spending less money on executive salaries and administrative costs and more on patient care," said Sen. Jay Rockefeller, D-W.Va., a leading advocate of the rebate provision.
White House spokesman Jay Carney said the report shows how Obama's law is "already strengthening the health care system for millions of Americans."
Like everything else about the overhaul, the future of the rebates depends on whether the Supreme Court upholds the law in a decision expected by early summer.
Seventeen states applied for waivers from the 80 percent standard, producing evidence that it would destabilize their private health insurance markets. Federal regulators granted adjustments to seven states, usually meeting each state's request part way.
Data from the nation's most populous state, California, were not ready and thus were not included. Final statistics on the rebates will be issued by the federal government in early summer.
Re: Report: Rebates from Obamacare health care law will top $1 billion
Another benefit of the health care law and we're still waiting for that "take over" and the "death panels".
A man must be both stupid and uncharitable who believes there is no virtue or truth but on his own side.-Joseph Addison
Healthcare Reform Disinformation
The ACA will actually be a huge tax break for the middle class.
If you are working for a company with >50 employees that doesn't provide, by law they are mandated to cover you. Law takes effect, you are getting a huge $5000-$11,000 benefit in your pocket. It is the mandate on business to provide healthcare coverage that is a tax break. <50 companies will also feel the heat to cover employees since they will now be a small minority, especially now the employees have to buy coverage.
For businesses already covering employees, the medical loss ratio cap that you are talking about will push prices down. There will also be more competition in the market. Many companies such as auto-manufacturers will see their premiums drop tremendously.
Tax or Penalty? How about a Tax Cut...
Damn over 50% of the uninsured work for large companies that will now have coverage mandated from their employer.
Last edited by COINTELPRO; 07-06-2012 at 08:31 PM.
Re: Healthcare Reform Disinformation
Liberal Media, Conservative Media
They are both Corporate Media....
That's the reality for the 425 workers at David Barr's nearly two dozen KFCs and Taco Bells across Alabama and Georgia. Barr has already done the math.
He currently provides health care for managerial staff only, and it costs him about $125,000 to cover the 30 who take it. Extending that to every full-timer would cost him another $545,782 a year.
Health reform's creation of state insurance exchanges promises to bring down those costs, but Barr said any expenses even close to that will still outmatch his available cash.
"This business model isn't meant to support those costs," he said.
To minimize expenses, he'll fire workers and cut hours to reduce the number of full-timers to 60. Then he'll opt for the penalty instead of paying insurance. A $60,000 fine pales in comparison to the huge potential rise in health care costs.
Cashiers would be replaced by self-order kiosks, cooks with chicken breading machines. These options are too expensive now, he said, but they would make sense then.
But killing off jobs will also violate one of Barr's guiding principles.
"We have a responsibility to provide a good position that allows people a sense of pride in their work," Barr said. "And I'd rather provide that for many than provide health care for few.
They keep running these stories about tax or penalty, and how the ACA will costs jobs.
I haven't seen a story about the millions of people that will be covered and provided a huge benefit/tax cut.
Last edited by COINTELPRO; 07-13-2012 at 06:30 PM.
Health Law Costs, Benefits Can Add Up To A Win For Young And Old
If there are winners under the Affordable Care Act, Martha Olson and Red Coine should probably both be counted on that list. Yet only one of them will actually pay less for health insurance when the law is fully implemented in 2014.
To make insurance more available to people who are older or have pre-existing conditions and can't always find affordable, comprehensive coverage, like Olson, the law pushes younger, healthier people like Coine -- who is currently uninsured -- to buy insurance and offset the system's costs. The individual mandate that nearly all Americans obtain health care coverage or pay a penalty is aimed at people like Coine.
As a result, Olson, who is 56 and has diabetes and high blood pressure, likely will pay less money every month for her health insurance. Coine, 32, may pay more than he would in today's market.
But both Olson and Coine will be able to comparison shop for plans on the health insurance exchanges. Both will be protected against insurer discrimination based on health status or gender, and neither will be booted off a plan if he or she gets sick. The law will ensure that health plans provide comprehensive benefits, something not guaranteed today. Moreover, Olson and Coine, who both earn moderate incomes, will be eligible for tax credits that will defray the cost of their insurance premiums and may qualify for additional assistance for their out-of-pocket expenses. And both will have those out-of-pocket expenses capped.
Coine, a self-employed long-distance truck driver who lives in Dallas, doesn't mind the individual mandate and said the debate over health care reform has aroused in him a sense of "personal responsibility" to be part of the system. "I feel compelled to pay for my own way. I don't want someone else to pick up my tab if something happens," he said. And given the law's promise of richer benefits, Coine said he expects he'll be getting more for his money than he did when he last had health insurance in 2008.
Forcing younger people to help cover the costs of older individuals' health care is "controversial," especially since younger people generally earn less, said Paul Ginsburg, president of the Center for Studying Health System Change in Washington. But while people like Coine may have to pay more when they're young and healthy, the law also guarantees they'll be able to find coverage when they grow older or become sick or injured. What's more, Ginsburg said, even if Coine's premiums are higher, he and Olson are both likely to receive better benefits with the cheapest plan under health care reform than they could today. "They're getting better coverage. That's worth something," he said.
Olson, a rental-property owner in Knoxville, Tenn., will see more of the advantages right away. The Affordable Care Act doesn't allow health insurers to raise prices for those with previous ailments or chronic illnesses, set higher premiums for women than for men, or charge older people more than three times the price for younger people. "With the new plans, you're going to get a certain level of protection," Olson said.
People who don't obtain health benefits at work will be able to buy plans on the exchanges, and those like Olson and Coine who earn between 100 percent and 400 percent of the federal poverty level -- between $11,170 and $44,680 for an individual this year -- will be eligible for tax credits. People who can't find a plan for less than 8 percent of their income are among those exempt from the individual mandate.
The law sets four tiers of health insurance: a bare-bones catastrophic plan, for people who are under 30 or exempt from the individual mandate, and three tiers dubbed "bronze," "silver," and "gold," which get progressively more expensive and more generous. Those who earn up to 133 percent of the poverty level will be eligible for Medicaid in states that opt to expand the program.
A "calculator" created by the Henry J. Kaiser Family Foundation in Menlo Park, Calif., provides estimates on much a silver plan will cost, considering factors such as income and age. A gold plan would cost 15 to 20 percent more and a bronze plan would cost 15 to 20 percent less, said Larry Levitt, executive director of the Kaiser Initiative on Health Reform and Private Insurance, a project run by the foundation.
Olson currently has subsidized health benefits through the law's Pre-Existing Condition Insurance Plan, which cost her $425 a month. She used to shell out $700 a month for a plan she described as "crappy" because it didn't cover health care she needed.
In 2014, she expects to earn about $35,000, based on her current income. Under the new system, her total premiums for a silver health plan will be $9,685, and her share after the tax credit will come to $3,325, or about $277 a month. By comparison, the average annual premium for job-based health insurance is $11,664, of which a worker pays $2,764, according to a recent survey.
Olson is concerned that she could be forced to pay the full cost if her income rises above 400 percent of poverty. At the same time, she noted that her old insurance would cost at least as much without offering guaranteed coverage and a minimum set of benefits.
Coine has been without health insurance for four years. He expects to make about $28,000 in 2014, so a silver plan would cost him $3,382, of which he'd pay $2,189, or about $182 a month.
That's more than the $88 a month he paid for his old health plan and more than the $155 price he found when shopping for health insurance last month. It's also higher than the individual mandate penalty, which will start at $95 or 1 percent of income for a single person in 2014, gradually increase until it reaches $695 or 2.5 percent of income in 2016, and then rise with inflation. But Coine noted that the $182 a month "probably would cover more" than a plan he could buy on the individual market today.
"Since I will be required to buy it, I will instead of paying the penalty," Coine said, "because one way or the other, I'm paying something extra and would rather get something for my money."
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and even then those yet to come will not be remembered."