WASHINGTON – More than 3 million health insurance policyholders and thousands of employers will share $1.3 billion in rebates this year, thanks to President Obamas health care law, a non-partisan research group said Thursday.
The rebates should average $127 for the people who get them, and Democrats are hoping theyll send an election-year message that Obamas much-criticized health care overhaul is starting to pay dividends for consumers. Critics of the law call that wishful thinking.
The law requires insurance companies to spend at least 80 percent of the premiums they collect on medical care and quality improvement or return the difference to consumers and employers. Although many large employer plans already meet that standard, its the first time the government has imposed such a requirement on the entire health insurance industry.
This is one of the most tangible benefits of the health reform law that consumers will have seen to date, said Larry Levitt, an expert on private insurance with the Kaiser Family Foundation, which analyzed industry filings with state health insurance commissioners to produce its report. Kaiser is a non-partisan information clearinghouse on the nations health care system.
Still, health insurance is expensive, and $127 may not even pay a months worth of premiums for single coverage.
And the insurance industry says consumers should take little comfort from the rebates because premiums are likely to go up overall as a result of new benefits and other requirements of the law.
The net of all the requirements will be an increase in costs for consumers, said Robert Zirkelbach, spokesman for Americas Health Insurance Plans, the main industry trade group.
But the Kaiser report said the rebate requirement may be acting as a brake on the industry, discouraging insurers from seeking big premium increases to avoid having to issue refunds later and face possible criticism.
The new law has provided an incentive for insurers to seek lower premium increases than they would have otherwise, the report said. This sentinel effect on premiums has likely produced more savings for consumers and employers than the rebates themselves.
The policyholders eligible for rebates are consumers who are not covered through an employer and buy their policy directly. Consumers in Texas, Oklahoma, South Carolina and Arizona are most likely to be eligible.
Employers do not have to pass their rebates on to workers and can also take them as a discount on next years premiums.