Rebates Coming to Consumers

Thanks to the Affordable Health Care Act (ACA), insurance companies who spend more than 20% of premiums on administration and profits are required to refund insured customers. This is just one of many benefits afforded citizens as a result of passage of the ACA.  The refunds are estimated by ConsumerUnion.com (the policy and action arm of Consumer Reports) to be $1.1billion. Over 12 million consumers will receive rebates.  Wow!  That’s impressive.

Insurers are now required to spend at least 80% of premiums on actual medical care instead of overhead and profits.  If they exceed these limits, the companies are required to give rebates to their customers.  The list of companies and rebates is provided here, by state. You can check on whether or not your insurance company is making rebates and whether or not you are likely to receive money back.  The average family will receive $151 back from rebates.

Rationale for Rebates

The rationale for requiring rebates when overhead and profits are excessive is not difficult to understand.  The rising cost of health care is fed from a variety of quarters, one of which is insurance company profits. None of us wants to deny a company the opportunity to make profits.  But when they become excessive and contribute to the rising cost of health care that ordinary citizens must bear, a line has to be drawn.

The ACA drew that line by requiring rebates if not enough money is spent by a company on medical care.  It’s like saying, you can’t limit medical care for customers by spending more than “X” amount on your overhead and profits. Seems reasonable to us.

As a result, rebates are an incentive to cover good medical care and place appropriate limits on administrative expenses and profits.  It’s a very reasonable approach in one arena to begin to curb the rising costs of health care in the United States.