Meanwhile, the 80/20 MLR is working EXACTLY how it's supposed to.
The ACA's Medical Loss Ratio rule requires insurance carriers to spend at least 80% of all individual market premiums on actual healthcare, as opposed to CEO bonuses, exotic junkets to Tahiti, marble columns in their corporate headquarters and the like. The way it works is pretty simple: If an insurance carrier ends up spending less than 80% of the premiums paid by their enrollees on actual healthcare claims in a given year, they have to pay the difference back to their customers in the form of a rebate check the following year. You can thank Senator Al Franken for this provision, and it's a good one..so good that nationally, carriers have had to return over $2.4 billion in excessive premiums to their enrollees over the past 4 years.
In many cases, there's not going to be a check in the mail saying "PREMIUM RELIEF FOR AMERICA'S WORKING MEN & WOMEN". There may not even be a check at all. There will just be an obscure line item in their monthly premium invoice, most likely labelled something like "PPAACA Noncompliance Credit Adjustment" or somesuch. Hell, for all I know the insurance companies may even be trying to take credit for the rebate themselves, making it sound like they've decided to knock $80 off the price out of the goodness of their hearts.
And that's assuming they receive the credit themselves at all. For ESI coverage, the insurers can just kick the premium rebate back to the employer, who may or may not bother letting their employees in on the deal.
Anyway, I think the headline of this piece speaks for itself. Just like the Obama administration and most Democrats have done a lousy job of tooting their own horn when it comes to the benefits of the law at large, they seem to be almost embarrassed about calling attention to one of the most important (in my view) tenets of the law: Making sure insurance companies actually provide, you know healthcare coverage with the payments they receive.
Anyway, the MLR rule is kind of moot for most ACA carriers; you can't give a rebate for spending less than 80% on healthcare needs when you're actually spending 85%, 90% or even over 100% of the premiums on it. HOWEVER, there are still some exceptions to this rule, as is the case today in Rhode Island:
Rhode Island health insurer sends $2M in rebate checks
Neighborhood Health Plan of Rhode Island has mailed out $2 million in refunds to 18,700 policyholders for premiums they paid in 2015.
The rebate checks range from $5 to $595, with the average rebate at about $104, according to Neighborhood Health.
...Neighborhood said it spent 76.5 percent of its total $55.8 million in premiums in 2015 on health care — missing the 80 percent target by 3.5 percent, according to a sample of the Sept. 28 letter the insurer sent policyholders. As a result, Neighborhood is required to rebate 3.5 percent of these policyholders' premiums.
Policyholders receiving the refunds are among Neighborhood’s newest market: people who do not qualify for Medicaid but who purchased coverage under the Affordable Care Act, known as Obamacare. Neighborhood began selling these policies in 2013 through the state’s health exchange, HealthSource RI.
These policyholders comprised about 10 percent of Neighborhood’s roughly 180,000 policyholders in 2015.
Neighborhood said the higher-than-necessary premiums charged to these 18,700 policyholders was the result of having limited actuarial data upon which to base their rates for 2015.
In other words, Neighborhood's 2015 rates were actually about 3.5% too high, so they had to refund the difference. However, it's unfair to accuse them of doing this deliberately; there was so little hard data to go on and so many unknown factors, it's reasonable to assume that they simply misjudged by a bit.
Oh, but it gets even better: Not only is Neighborhood reducing their rates by a whopping 9.8% next year, they based that on on the assumption that they had priced things correctly the year before. Assuming their 2016/2017 experience isn't too far out of line with expectations, that could mean another rebate for enrollees next year as well:
...Neighborhood has received approval for a 9.8-percent rate cut for 2017 that will apply to the same category of customers now receiving the rebates. However, the rebate “did not factor into our decision to file a 2017 (rate) decrease,” Tigue said. He said Neighborhood didn’t know they would need to refund policyholders until July 2016, after it had filed a request for the rate cut.
This is exactly the way that the ACA is supposed to work. I realize that examples of this type of MLR rule keeping excessive profits in check seem to be few & far between this year, but it's important to call attention to them when they do.