How Will Florida Health Insurance Handle The Mlr Mandate?
This August, Florida health insurance companies are expected to pay back an estimated 706
,000 Florida residents in the form of rebates mandated by the medical-loss-ratio mandate of the Affordable Care Act. Over $100 million in health insurance rebates are projected to go to customers.Under the new rule created by the Patient Protection and Affordable Care Act in 2010 called the minimum medical loss ratio, insurance companies are only allowed to spend 20 percent of their total premium revenue on administrative costs for individual and small group policies. The remaining 80 percent must be spent on health care. For large group policies, insurers are required to spend 85 percent on medical care and 15 percent on administrative expenses such as advertising and profit. Failure to comply would mean giving back the unused premium money to policyholders in the form of rebates.
Insurance companies in Florida began reporting their financial figures this month to give federal officials sufficient time to assess how much they owe in rebates. Refund estimates from Florida insurers will not be released until next month and we have to wait until June before the final figures will be announced. Rebates could come in as discounts on future healthcare bills or be paid as checks.
Ayram Goldstein, a spokesman for the national consumer group Health Care for America Now, predicts that the rebates to be given back to hundreds of thousands of Florida health insurance plan holders would be a very big number.
In an estimate given by state officials, 12 Florida health insurance companies would have to pay back $107 million in rebates this year to about 706,000 individual health insurance plan holders. Each of those policyholders would approximately get back $152 as a rebate. The projected insurance companies that will most likely have the biggest rebates would be United Healthcare subsidiary Golden Rule with $37 million, Humana with $28 million, and Connecticut General with $11 million.
Why Was The MLR Mandate Created?
The main objective of the MLR rule by the health care reform law was to make sure that policyholders get greater value for their money at the same time receiving better quality of care. With this new mandate, Florida health insurance companies are required to spend more on their policyholder's healthcare expenses than what they used to pay in the past.
Since insurers in Florida cannot escape this rule, one of their proposals if they do not meet the required MLR ratio for a specific health insurance plan would be to drop them. Although high-deductible plans offer low premiums, they are also expected to have lower MLRs and are more likely to issue rebates. As to what will happen to this type of plan, we have to see for ourselves later this year.
Contradicting Views On The MLR Florida Health Insurance Mandate
Republicans and insurance companies have strongly opposed the law. For them, the MLR mandate is arbitrary and would force some insurance companies to shut down.
According to Robert Zirkelbach, a spokesman for America's Health Insurance Plans (AHIP), restricting the spending of insurance companies on non-medical items does not help bring down the healthcare costs. He said that it has no effect on the "real drivers of premium increases for consumers" such as technological advancements and the cost of treatment and health care providers.
However, consumer advocates praise the law as it ensures that people get the healthcare they deserve. Laura Goodhue, executive director of Florida Community Health Action Information Network, said that with this new mandate, finally consumers will get more value for their money and getting the quality health care that they paid for.
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