Sen. Franken’s health reform provision will return $1.4 million in rebate checks to thousands of Minnesotans
NEWS RELEASE — Washington, D.C. —A new government report shows that because of a provision authored by U.S. Sen. Al Franken (D-Minn.) in the health reform law, more than 9,000 Minnesotans will benefit from health insurance company rebates averaging $300 per family (with some of the rebate checks benefiting multiple people, like children of the policyholder).
Nationwide, Americans are slated to receive some $500 million in rebates.
“Consumers’ premium dollars shouldn’t be spent on marketing or huge bonuses for executives—they should go toward paying for actual health care,” said Sen. Franken. “Making sure we keep the cost of health care in check has been among my top priorities since I came to the Senate, so I’m glad that, because of my provision, families in Minnesota and across the country will be able to put some money back into their pockets in the form of rebate checks.”
The new report, issued by the Center for Medicare and Medicaid Services, also shows that because of Sen. Franken’s provision and other programs in 2010’s health reform law, consumers have saved $3.4 billion total on their premiums.
The provision—called the Medical Loss Ratio (MLR) or the 80/20 rule—requires health insurers to spend at least 80-85 percent of what they collect in premiums on actual health services for their customers, as opposed to administrative costs, profits, marketing, or CEO salaries. Insurance companies that did not meet this threshold for 2012 must rebate their policy holders no later than Aug. 1, 2013.
Last year, consumers received $1.1 billion in rebates—nearly double this year’s total— meaning that more and more insurance companies are meeting the requirements outlined in Sen. Franken’s provision, which ultimately means consumers benefit in the form of savings on premiums.
Sen. Franken authored the MLR provision during the debate on health care reform. It was inspired by Minnesota’s long-standing medical loss ratio law and the state’s non-profit health insurers, which lead the nation in keeping administrative costs low.
Under the MLR provision, large group health insurers are required to spend at least 85 percent of what they collect in premiums on actual health services. Small group and individual market insurers are required to spend at least 80 percent.