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Medical loss ratio returns $2.4 billion to consumers

Insurance carriers sent $469 million in rebates to consumers in 2015

Thanks to the Affordable Care Act’s medical loss ratio (MLR) – or 80/20 rule – health insurance companies were required to pay $469 million in rebates to about 5.5 million people in 2015 – bringing the total over four years to more than $2.4 billion. The MLR amendment in the ACA was authored by Sen. Al Franken (D-Minn.).

The rebates are tied to the medical loss ratio: the percentage of insurance premium dollars spent on actual health care – as opposed to marketing, administrative expenses and CEO salaries. If an insurer spends less than 80 percent of individual and small group plan premiums (85 percent for large group plans) on providing medical care, they must rebate the excess dollars back to consumers by August 1 of each year.

The rebates that were sent out by carriers in 2015 were based on the average MLR for the prior three years (2012 to 2014). The rebates that are sent out in 2016 will be based on each carrier’s average MLR for 2013 to 2015, and so forth.

2015 is the fourth year of payouts through the 80/20 rule. From 2012 to 2014, total rebate amounts dropped significantly each year. But the total rebate amount in 2015 was higher than it was in 2014; for the individual market, the rebate amount in 2015 was the highest it had been since 2012 (the first year the rebates were sent out).

However, it appears that the MLR requirements have been effective in trimming administrative expenses: Average MLRs have been steadily increasing since 2011. In 2014, they ranged from 85.9 percent in the individual market, to 96.5 percent in the large group market.

Total rebate amounts so far have been:

  • $1.1 billion in 2012 (based on 2011 MLR, as the rule became effective that year)
  • $504 million in 2013
  • $333 million in 2014
  • $469 million in 2015

In 2015, the 5.5 million consumers who received rebates were in 3.7 million families. Among them, the average family’s rebate was $129 ($139 in the individual market, $134 in the small group market, and $102 in the large group market).

The highest average (per household) rebates among families that received them were in Wyoming ($1,617) and Hawaii ($1,597). In Vermont, South Dakota, Minnesota, and Rhode Island, there were no rebates necessary in 2015. See the statistics for your state below. Click on your state name to see more information about obtaining affordable healthcare in your state.

2015 ACA health insurance premium rebates

State Total Rebates Consumers Benefiting Average per Family
Alaska $597,002 12,777 $59
Alabama $1,503,011 12,336 $177
Arkansas $13,860,180 80,460 $305
Arizona $10,360,072 259,855 $59
California $97,950,227 723,170 $158
Colorado $5,434,880 117,683 $84
Connecticut $1,834,954 22,166 $177
District of Columbia $14,557,940 41,620 $564
Delaware $2,072,207 14,399 $241
Florida $59,908,232 821,814 $114
Georgia $17,253,523 187,600 $124
Hawaii $1,419,597 1,723 $1,597
Iowa $663,723 8,671 $119
Idaho $738,522 1,461 $846
Illinois $3,574,850 48,949 $114
Indiana $11,850,559 261,183 $84
Kansas $2,469,180 21,369 $184
Kentucky $8,982,159 137,806 $89
Louisiana $1,978,637 57,469 $61
Massachusetts $12,617,420 98,790 $235
Maryland $23,054,136 164,535 $245
Maine $3,488,556 35,861 $105
Michigan $25,676,256 449,681 $120
Minnesota $0 0 $0
Missouri $13,587,035 225,482 $109
Mississippi $20,694,520 99,289 $284
Montana $612,253 10,240 $87
North Carolina $8,449,762 162,234 $81
North Dakota $53,680 193 $287
Nebraska $194,613 999 $262
New Hampshire $9,306,221 54,519 $197
New Jersey $3,091,497 89,403 $46
New Mexico $1,512,640 11,862 $240
Nevada $3,797,839 50,981 $116
New York $8,381,114 293,721 $55
Ohio $4,516,640 157,480 $36
Oklahoma $6,673,626 76,285 $153
Oregon $3,171,343 29,692 $152
Pennsylvania $6,367,923 40,544 $188
Rhode Island $0 0 $0
South Carolina $14,872,151 121,015 $142
South Dakota $0 0 $0
Tennessee $3,251,939 51,863 $105
Texas $14,119,897 96,024 $234
Utah $430,430 2,464 $325
Virginia $12,130,227 180,113 $119
Vermont $0 0 $0
Washington $11,024,698 190,474 $76
Wisconsin $566,915 4,963 $179
West Virginia $445,019 1,770 $329
Wyoming $266,734 484 $1,617

CMS has a further breakdown by individual, small group and large group markets.

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