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TAHU: PPACA MLR Rebates Show Plan Costs Not the Problem

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The head of the Texas Association of Health Underwriters (TAHU) has put out a statement arguing the early medical loss ratio (MLR) rebate estimates support the argument that high administrative costs are only a small part of the U.S. health care cost problem.

Joanna Antongiovanni, president of TAHU, Dallas, released the statement in response to an MLR rebate estimate report from analysts at the Henry J. Kaiser Family Foundation, Menlo Park, Calif.

The Kaiser analysts are predicting that 3 million U.S. health insurance customers will split about $1.3 billion in health insurance MLR rebates.

An employer who receives a rebate might get back an average of just $127 for each covered employee, Antongiovanni says, citing the Kaiser analysis.

The rebate would be small change compared with the typical annual premium of $5,400 for employee-only coverage and $15,100 for family coverage, Antongiovanni says.

Drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) included the minimum MLR provision in PPACA in an effort to make sure health insurance policyholders were getting good value for their money.

The provision requires that health insurers spend at least 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts or else makeup the difference by sending customers rebates.

Insurers are supposed to complete submitting MLR filings by June 1.

Kaiser analysts emphasized that the rebates could total more than $1 billion.

Antongiovanni says the small size of that figure relative to what individuals and employers pay for coverage shows that health plan and health insurer administrative costs account for a relatively modest percentage of health care costs, and that excessive administrative costs account for a very small share of total costs.

“Without addressing the true cause of increasing rates, the actual cost of care, we will be ineffective in solving the health care conundrum in our country,” Antongiovanni says.