HHS: Insurance Efficiency Saves Consumers $3.9B on Premiums in 2012

HHS announced today that consumers saved $3.9 billion on health insurance in 2012, thanks to the Patient Protection and Affordable Care Act's medical loss ratio provision.

 

The provision, also known as the 80/20 rule, saved consumers $3.4 billion on lower premiums and $500 million in additional rebates. The rule allows insurance companies to spend only 20 percent of premium funds on administrative costs, with the remaining 80 percent spent on medical claims. 

 

Rebates from the MLR provision will be repaid through either checks in the mail, a lump-sum reimbursement to the account of payment, future premium reductions or more generous employer benefits, according to the HHS press release.

 

Since MLR provision took effect, consumers have saved $5 billion in total on health insurance. 

 

For the original report from the CMS, click here.