Changes took place on the hill this past short holiday week when the Dept. of Health and Human Services, also known as HHS, released their final ruling dealing with medical loss ratio – a requirement of the new health reform law.
This portion of the new act will be effective in 2011 and will closely monitor insurer’s spending. New laws state, 85% of every dollar of revenue for large groups will have to be used towards health care instead of administrative costs, and 80% on individual and small groups too.
The Affordable Care Act (ACA) will allow companies to now use 15 to 20 cents per dollar to go back to salaries, bonuses and marketing. Insurers must publicly report these figures in order to make sure there’s no abuse of premium dollars.
With an overflow of money going into health care, if insurance companies do not spend it properly, they are required to refund unearned money back to the policy holder or to the employer/named insured. This could bring rebates of $164, on average, to over nine million Americans starting in 2012 according to the HHS.
Many democrats released statements of approval towards the first of many steps in health care reform. Representative Henry Waxman of California being one stated, “The American public deserves to know what happens to their premium dollars, and they deserve to have those dollars devoted to providing health care services.”
And Senator Max Baucus (D-Mont.) also in approval says these changes will ultimately lead to improved healthcare because it will ensure that “consumers’ premium dollars are spent on quality care, not insurance company profits.”