Indiana consumers are set to receive rebates that are 59 percent larger this year as Obamacare continues to force health insurers to refund premiums that exceed actual medical claims by more than 20 percent.
That’s opposite the trend nationally, where insurers successfully lowered their rebates by reducing or slowing the rise in premiums.
Rebates in Indiana will average $157 per family, based on premiums charged by insurers in 2012.
Those rebates reflect the $22.6 million that insurers charged above thresholds established by the 2010 Patient Protection & Affordable Care Act. The law, better known as Obamacare, required that insurers spend on medical care no less than 80 percent of the premiums they charge to individuals and small businesses. The requirement is 85 percent for large employer customers.
Nationally, insurer rebates totaled $504 million, or an average of $98 per family, according to data released last week by the U.S. Department of Health and Human Services.
The Obama administration also claimed that the rule, known as a cap on medical-loss ratios, also led insurers to not enact $3.4 billion in premium hikes last year.
“This new standard is increasing transparency and accountability, promoting better business practices and competition among insurance companies, and ensuring consumers receive value for their premium dollars,” said Kathleen Sebelius, secretary of the U.S. Department of Health & Human Services, in a prepared statement.
It’s not clear why rebates spiked in Indiana. One challenge for insurers may have been the fact that medical spending is rising more slowly than it has in decades, even dipping in April for the first time since 1975.
A year ago, rebates in Indiana averaged $99 per family, whereas the national average was $151 per family.
Most of the rebates will flow to the small employers that sponsor health insurance for their workers. In the small group market, rebates will be paid on policies that cover 261,300 Hoosiers. The average rebate per family among small employers was $151.
It is up to employers how they pass on those savings to their workers.
Far fewer large employers saw a rebate. Large employer health plans that cover just 3,200 will receive a rebate. However, the rebate per family is large, averaging $638.
Last, 8,662 Hoosiers who are part of a health insurance plan purchased directly from an insurer—without any help from an employer—will also receive a rebate. Those refunds will average $147 per family.
Insurers can pay rebates in four ways: a rebate check in the mail, a reimbursement to the account used to buy insurance, a reduction in next year’s premium, or a refund to employers. All rebates are scheduled to be paid on Aug. 1.