Regulations put into place from the system wide overhaul have customers spending less.
The results of a study by the Commonwealth Fund, a research institution, have now been released, indicating that the health insurance rules that have been put into place by the healthcare law reforms have caused system wide improvements in efficiency that saved Americans almost $1.5 billion last year.
The law’s provision says that insurers must spend at least 80 percent of collected premiums on medical care
This is the case among insurers selling plans to individuals and families, as well as companies that have under 50 employees. Among insurers that sell health insurance plans to larger employers with 50 workers or more, at least 85 percent of the collected premiums must be spent on medical care.
Health insurance companies must refund customers when they spend too much in other areas.
In order to comply with this regulation, the response of health insurance companies this year was to send rebates to customers, cut their overhead, and in some circumstances, lower their profits, said the study. The research was performed by Michael McCue, from Virginia Commonwealth University, and Mark Hall, from Wake Forest University of Winston-Salem, North Carolina.
According to the Commonwealth Fund’s vice president, Sara Collins, “The medical loss ratio requirements are intended to give insurers an incentive to be more efficient and use most of their premium dollars for patient care.” The news release from the New York based research institution also stated that “This report is encouraging, as it demonstrates that these new rules are improving value for people buying health insurance.”
The study showed that due to the health insurance regulations from the healthcare reforms, insurers issued rebates of approximately $1.1 billion and slashed their admin costs and profits by $350 million. In order to perform their analysis and come up with the findings, the researchers gleaned their data from the National Association of Insurance Commissioners (NAIC), which is an official group of state regulators.
Individuals who purchased their own health insurance, instead of receiving their coverage through their employers, were the ones who experienced the largest savings from the regulations.