Sylvia Burwell the Secretary of Health and Human Services announced this past week that consumers have saved more than $9 billion on premiums for health insurance since 2011 thanks to the Affordable Care Act.
The 80-20 rule, which was created out of the law, is also referred to as the Medical Loss Ratio. It requires insurers to spend a minimum of 80% of premium dollars towards quality improvement or patient care. If the insurer spends over 20% amount on red tape and profits, they owe the consumers a refund.
A report from HHS released this week showed that in 2013 alone, consumers saved nationwide more than $3.8 billion on premiums as the insurance companies were more efficient.
In addition, consumers across the country will be saving $330 million in different refunds, with more than 6.8 million consumers in line to receive a refund benefit on average of $80 a family.
Affordable Care Act standards such as this one and others, contributed to a savings by consumers of more than $4.1 billion in 2013 on premiums, for over $9 billion in total savings since the program’s start.
The HHS report also showed that since this rule went into effect, more insurers from last year to this year are meeting the standard of 80-20 by spending more premium dollars on patient care as well as quality than they are on bonuses and red tape.
The refunds consumers will be paid if the insurer failed to spend enough dollars from premiums on quality improvement or patient care are paid in the following ways: a refund check, a reimbursement in a lump sum or a lowering of future premiums.
The rule of 80-20, along with more standards like the required review of all proposed increases in premium, is one of a number of reforms created under this new law.
The 80-20 rule is a way to ensure all Americans have access to affordable, quality health coverage.