The Department of Health and
Human Services (HHS) has invoked a regulation that from 2011
requires them to spend between 80% and 85% of their premium income
on medical care and quality improvement.
The regulation forms part of
the Patient Protection and Affordable Care Act passed earlier this
year.
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HHS secretary Kathleen
Sebelius said: “These new rules are an important step to hold
insurance companies accountable and increase value for
consumers.”
The 80% minimum applies to
insurers in the individual and small-group markets and the 85%
minimum to insurers in the large-group market. Insurers not meeting
minimum medical loss ratios will be required to provide a rebate to
their policyholders starting in 2012.
According to the HHS, in 2011, the new rules encompass up
to 74.8m insured Americans and estimates indicate that up to 9m
Americans could be eligible for rebates starting in 2012, worth up
to $1.4bn. Average rebates per person could total $164 in the
individual market.
