Report: Rebates from health care law will top $1B

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Employers do not have to pass their rebates on to workers, and can also take them as a discount on next year’s premiums.

Insurers serving large employers face a stiffer requirement. Under the law, they must spend 85 percent of premiums on medical costs. The study found that 125 plans covering 7.5 million people at large employers will give back a total of $541 million.

Most plans operated by major national employers are exempt from the requirement. The biggest companies usually set aside money to cover most of their workers’ medical expenses. Typically they hire an insurer to administer their plan, but they do not buy full coverage from the insurer.

Supporters of the requirement say it will keep insures from padding their profits at the expense of unsuspecting consumers. An efficiently run insurer should not have any problem earning a healthy return after devoting 80 percent of premiums to medical care, they say.

“Millions are benefiting because health insurance companies are spending less money on executive salaries and administrative costs and more on patient care,” said Sen. Jay Rockefeller, D-W.Va., a leading advocate of the rebate provision.

White House spokesman Jay Carney said the report shows how Obama’s law is “already strengthening the health care system for millions of Americans.”

Like everything else about the overhaul, the future of the rebates depends on whether the Supreme Court upholds the law in a decision expected by early summer.

Seventeen states applied for waivers from the 80 percent standard, producing evidence that it would destabilize their private health insurance markets. Federal regulators granted adjustments to seven states, usually meeting each state’s request part way.

The Kaiser report has one significant gap. Data from the nation’s most populous state, California, were not ready and thus were not included. Final statistics on the rebates will be issued by the federal government in early summer.

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Online: Kaiser report - http://tinyurl.com/d2bcvxy

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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