Dems tout health insurance premium rebates

The U.S. Department of Health and Human Services issued a final regulation today that it estimates will save insured Americans up to $4.9 billion in cash rebates, lower premiums or increase benefits over the next three years, and Democrats are crowing.

The new regulation is part of the so-called ‘medical-loss ratio’ provisions contained in the Patient Protection and Affordable Care Act – the healthcare reform bill – that President Barack Obama signed into law in March. Those provisions demand that most insurers spend at least 80 to 85 percent of consumers’ premiums on health care, instead of on advertising, CEO bonuses, and other administrative costs not related to health care’s quality.

To Democrats, this looks like ammunition for the coming Congress, in which a Republican House majority hopes to repeal the Affordable Care Act.

“Repeal this?” House Education and Labor Committee Chairman George Miller, D-Martinez, asked in his news release. “Republicans in Washington have pledged to repeal the health care law. If they succeed, they will be taking money right out of the pocket of millions of average Americans. They might think that’s a good idea but I certainly don’t. So let’s just be very clear about what’s at stake when Republicans call for the repeal of the new health care law.

Miller said the new regulation is good news for Americans who are paying too much in health insurance premiums – some of which have been raised by double digits even while insurers report billions in profits.

“But make no mistake about it — repealing the health reform law will take money directly out of consumers’ pockets,” he said.

House Ways and Means Health Subcommittee Chairman Pete Stark, D-Fremont, issued a news release that said more than 20 percent of consumers are now in plans that spend more than 30 cents of every premium dollar on administrative costs, while 25 percent more are in plans that spent 25 to 30 cents on such costs.

Pete StarkOnce this new regulation takes effect, he said, up to 74.8 million insured Americans will be protected from excessive insurer spending, and up to 9 million may be eligible for rebates starting in 2012, worth up to $1.4 billion and possibly averaging as much as $164 per person in the individual market.

“By pledging to repeal health reform, House Republicans would eliminate this important protection and allow insurance companies to continue unlimited spending on CEO bonuses, profits and lobbying – and less on patients’ health care,” Stark said. “The Republican response to today’s announcement will be telling. Will they stand with working families or the health insurance industry?”

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.

  • RR, Uninvited Columnist

    What Messrs Stark and Miller don’t explain is how Uncle Sam will administer the industry administrators.

  • Steve Bloom

    This doesn’t seem like big bucks on a per-person basis. It seems to me that the extent to which the law holds down future rates is far more important. Does (will) it?

  • John W

    Right. $4.9 billion is a tenth of one percent of what we spend on health care. Dems, Repubs and the general public never seem to get it that our problem is runaway medical costs. We can dink around with the middleman we call insurance all we want, but it makes no difference if the underlying health care costs that drive insurance rates keep growing at two or three times as much as the economy as a whole. Nobody — private sector, public sector or individuals — will be able to afford good health care.

  • John W

    Okay. Make that two tenths of one percent.

  • Common Tater

    Do you really expect any thinking person to trust Miller or Stark on ANY issue?

  • Elwood

    All this dimmiecrat wonderfulness will be paid for by our grandchildren in higher taxes.

    There is no free lunch.

  • John W

    To be fair, this is not all smoke and mirrors. What they are talking about is premiums paid by people who have to buy insurance on their own in the dysfunctional individual insurance market, rather than getting it through an employer plan. “Obamacare” is 90% about reforming that segment of the health insurance industry, not overhauling the entire health care system. People who have always had access to employer-sponsored health insurance often don’t realize what people in the individual market are up against — no tax preference, higher premiums, pre-existing conditions, arbitrarily denied claims etc. In contrast to insurance obtained through employers, where 85% or more of each premium dollar typically goes to pay for health care, 70% or less of premiums in the less regulated individual market have gone to paying for health care.

  • Ralph Hoffmann

    Many insurance companies have high profits because their stock isn’t publicly traded.