Report: Affordable Care Act rule saves consumers $9 billion on health insurance premiums

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Health and Human Services Secretary Sylvia M. Burwell.

Consumers saved $9 billion on their health insurance premiums since 2011 because of the Affordable Care Act, according to Health and Human Services Secretary Sylvia M. Burwell.

The 80/20 rule, also known as the Medical Loss Ratio 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.



“We are pleased that the Affordable Care Act continues to provide Americans better value for their premium dollars,” said Burwell in a news release. “We are continuing our work on building a sustainable long-term system, and provisions such as the 80/20 rule are providing Americans with immediate savings and helping to bring transparency and accountability to the insurance market over the long-term.”



An HHS report released on July 24 shows that last year consumers nationwide saved $3.8 billion up front on their premiums as insurance companies operated more efficiently.

Additionally, consumers nationwide will save $330 million in refunds, with 6.8 million consumers due to receive an average refund benefit of $80 per family.

This and other Affordable Care Act standards contributed to consumers saving about $4.1 billion on premiums in 2013, for a total of $9 billion in savings since the MLR program’s inception, according to HHS.

The report shows that since the rule took effect, more insurers are meeting the 80/20 standard by spending more of the premium dollars they collect on patient care.



If an insurer did not spend enough premium dollars on patient care and quality improvement, they must pay refunds to consumers in one of the following ways:

· a refund check in the mail.

· a lump-sum reimbursement to the same account that was used to pay the premium.

· a reduction in their future premiums.