Rockefeller Report Concludes That Health Insurance Companies Could Owe Consumers as Much as $2 Billion This Year

Key Reform Provision Will Bring Rebates, Lower Premiums in 2011

May 24, 2011

Consumer Protection 2WASHINGTON, D.C.—Chairman John D. (Jay) Rockefeller IV today released a new report demonstrating that provisions in last year’s health reform law could save consumers across the country billions of dollars this year. This marks the first time that estimated savings from the medical loss ratio (MLR) provisions of the reform law have been quantified using the insurance companies' own data.

“For as long as they’ve been around, some of the biggest health insurance companies have padded their profits and boosted pay for CEO’s by siphoning off premium dollars that instead should have been going to pay for basic health care. No more,” Chairman Rockefeller said. “The historic reform bill of 2010 is ending that practice. Thanks to the change, some health insurance companies will soon be lowering their premiums. Others will send rebates to insured families. This is long overdue. Finally, consumers will get the health care benefits they have paid for.”

According to financial data in the report, if the MLR rebate provision had been in effect in 2010:

  • American consumers in all 50 states would have received rebates totaling almost $2 billion from their health insurance companies, and;
  • More than half of consumers in the individual market would have received money back in 2010. That’s because their insurance companies were using less than 80 percent of their health care dollars on providing care or improving the quality of their care.

The report also shows how these rebates would be reduced by more than 60 percent if agent and broker commissions were excluded from the MLR calculation. Congressmen Mike Rogers (R-MI-8) and John Barrow (D-GA-12) recently introduced legislation to exclude these commissions from the MLR calculation.