Health care law saves consumers money, provides more resources to states

Consumers saved $1 billion in 2013 and states receive more funding to continue to scrutinize rate hikes

Health and Human Services Secretary Sylvia M. Burwell today released a new report showing that in 2013 alone, consumers benefitted from $1 billion in savings from lower than originally requested health insurance rates. This includes $290 million in savings for individuals and families, and $703 million in savings for small employers. Combined with refunds consumers received because of the 80/20 rule, consumers saved more than $2.8 billion in 2012 and 2013. Secretary Burwell also announced roughly $25 million in rate review grant awards to 21 states.

The Affordable Care Act is bringing greater scrutiny and accountability to health insurance premium increases, resulting in big savings for consumers. Because of the law’s “rate review” provision and state efforts, consumers are continuing to benefit from lower than requested premium increases.

“Before the Affordable Care Act, consumers regularly faced significant annual premium increases,” said Secretary Burwell. “In 2013 alone, we see that rate review programs saved consumers approximately $1 billion while providing them with the information they need to get the care they deserve.”

Before the Affordable Care Act, annual premium increases were often in the double digits. Insurance companies were able to raise premiums without explaining their actions to regulators or the public or justifying the reasons for their high rates to consumers. Now, the law requires insurance companies in every state to publicly justify any rate increase of 10 percent or more. Consistent with previous years since the rate review provision went into effect, today’s report shows that the implemented rate increases were smaller than what was originally requested across both the individual and small group markets.

The Affordable Care Act provides states with Health Insurance Rate Review Grants to enhance their rate review programs and bring greater transparency to the process. Today’s awards will continue to support state efforts to enhance their review of health insurance rate increases, educate consumers, help hold insurance companies accountable, and to scrutinize medical pricing data. States getting these awards include: Arizona, Arkansas, California, Delaware, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, Oregon, Rhode Island, Utah, Vermont, Washington, and Wisconsin. These grants are also supporting data centers that, among other activities, expand the availability of medical pricing information available to consumers, businesses, and entrepreneurs.

Rate review is one of many initiatives in the health care law aimed at saving money for consumers and it works in conjunction with the 80/20 rule. The 80/20 rule, also known as the Medical Loss Ratio (MLR) rule, requires insurers to spend at least 80 percent of premium dollars on patient care and quality improvement activities. If insurers spend an excessive amount on profits and red tape, they owe a refund back to consumers. The combined amount of refunds and lower than originally requested rates resulted in more than $2.8 billion in savings for consumers in 2012 and 2013.

Health care law saves consumers money, provides more resources to states.

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