Under the federal health care law, Texas will receive the most health insurance rebates of any state. The Affordable Care Act requires insurance companies that spend less than 80 percent of premiums on actual health care to rebate customers.
The US Department of Health and Human Services has finalized the rebate amounts required under the new law. Nearly 13 million Americans will share in $1 billion in rebates from insurance companies. These are companies that spent more than is allowed on administrative costs, like salaries. And now must rebate that amount to customers. It’s called the Medical Loss Ratio.
Texas gets the most of any state: $167 million. The rebate to the individual market customer, the person who buys a policy directly from an insurance company is $356, double the national average.
Stacey Pogue, with the Center for Public Policy Priorities in Austin says there are a couple of reasons for the number of rebates in Texas.
“Part of it is because we don’t have a lot of oversight or regulation of the affordability of health premiums in the state, not a lot of what you find in other states, for example. And part of the reason we get so much back is we’ve got a whole lot of Texans,” said Pogue. “We’ve got a big population.”
But Pogue adds that 25 percent of that population does not have health insurance at all.
She says the Texas Department of Insurance reviews rates, but state law does not grant the authority to reduce a rate hike if it appears excessive. The rebates must be paid by August 1st. They can be a check, a lump-sum payment automatically deposited in the policy holder’s account; or a direct reduction in future premiums. Employers who provide insurance in what’s called the large market will decide on one of those rebate methods, or apply the rebate in a way that benefits employees.
Those rebates are small, an average $61. Health and Human Services says more than two thirds of insured Americans are with companies that meet or exceed the medical care vs. administration spending ratio. That includes Blue Cross Blue Shield of Texas, the state’s largest health insurance provider.