200,000 Coloradans to get rebates, thanks to ACA

More than 200,000 Coloradans soon will receive rebates thanks to a provision in the Affordable Care Act that ensures "consumers get fair value for their health care dollar."

Health and Human Services Secretary Kathleen Sebelius announced today that 12.8 million Americans will receive rebates totaling $1.1 billion under the provision that requires insurance companies to spend at least 80 percent of premiums on medical care. The remaining 20 percent can be spent on administrative costs, including salaries, sales and advertising.

In Colorado, rebates will total $27.4 million, with an average rebate of $227 per family. Here is a breakdown:

• Individual market: $3.1 million in rebates to 109,460 individuals, or an average of $44.
• Small-group market: $653,254 in rebates to 2,916 families, average $403.
• Large-group market: $23.7 million in rebates to 95,821 families, average $475.

"The 80/20 rule helps ensure consumers get fair value for their health care dollar," Sebelius said. Consumers in every state will receive a notice from their insurance company informing them of the 80/20 rule and if their company met the standard.

Insurance companies will send rebates by Aug. 1. They will be in the form of a check; reimbursement to consumer's account; reduction in future premiums; or an arrangement through a consumer's employer.

In Colorado and across the nation, officials said, consumers benefited from 80/20 rule because insurance companies lowered prices so that they would meet the standard.

The industry term for the split between health care spending and administrative costs is  "medical loss ratio." Before the Affordable Care Act, there was no national standard.

For more on medical loss ratios, see our previous Straight Talk email on the subject: Medical loss ratio has potential to bend the cost curve on premiums