Health insurance companies are supplying rebates to 42,036 Nebraska residents and 1,766 Iowa residents under portions of the federal Affordable Care Act, the federal government reported Thursday.
The Department of Health and Human Services said the rebates total $2,000,151 for the Nebraskans and average $82 per family. The Iowa rebates total $147,246 and average $111 per family.
The size of the rebates and the average number of people covered per family insurance policy vary among states. Nationally, the rebates totaled $500 million for 8.5 million people, with an average of $100 per family, the department said.
The Affordable Care Act limits how much of customers’ premiums an insurer can spend on items other than health care, such as marketing and administration. If a company exceeds the limit, it must provide a rebate equal to the portion of premium that exceeded the limit.
The rebates, due by Aug. 1, can come as a check in the mail; reimbursement in an account used to pay premiums, such as a credit or debit card account; a reduction in insurance premiums; or employers using rebates to improve health coverage, the department said.
The department also said the limits on nonhealth spending by insurers saved 77.8 million consumers a total of $3.4 billion because insurance companies have become more efficient.
The law’s “medical loss ratio” standard, also called the “80/20 rule,” requires insurance companies to spend at least 80 percent of the premiums they collect on medical services, or 85 percent with groups of 100 or more people.
No rebates are being paid by Blue Cross Blue Shield of Nebraska, the state’s largest health insurer with about 700,000 members, about 625,000 of them in Nebraska. Blue Cross’s non-health-care spending was within the law’s limits, said Dan Alm, a Blue Cross vice president.
Alm said not-for-profit insurers such as Blue Cross are more likely to already meet the spending standard because they don’t charge premiums to pay for dividends to shareholders or other requirements of for-profit insurers.
Iowa’s Blue Cross affiliate, Wellmark Inc., also is a not-for-profit group and has a larger market share than Blue Cross of Nebraska, which may account for the smaller number of people receiving rebates in Iowa despite its larger population.
Blue Cross of Nebraska spends about 89 percent or 88 percent of its premium dollars for medical services, Alm said, setting its premium rates to reach that level. “We look to be as efficient in our delivery of our products as possible. This (requirement) has made us even more focused on that.”
Human Services Secretary Kathleen Sebelius said in a press release that the 80/20 rule promotes transparency, accountability, better business practices and competition among insurance companies, which keep consumer costs down by lowering insurance prices or improving coverage.