US Senate Committee on Health, Education, Labor, & Pensions

Harkin Statement on New Report Showing the Affordable Care Act Will Return $500 Million in Rebates to American Consumers

Thursday, June 20, 2013

WASHINGTON, D.C.—U.S. Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released the following statement today on a report issued by the U.S. Department of Health and Human Services (HHS) showing that under the health reform law, the Affordable Care Act (ACA), consumers will receive $500 million in rebates from health insurance companies by August 1, 2013. The report was compiled using 2012 health insurer data.

The rebates are required by a provision in the ACA known as the “Medical Loss Ratio,” or “80/20 Rule,” which directs health insurance companies to spend 80 percent of premium dollars on patient care and quality improvement. If they spend more than 20 percent of premium dollars on non-care expenses—including executive salaries, overhead, or marketing—they must pay rebates to consumers, either by a rebate check, with a lump-sum reimbursement to a credit or debit card, a reduction in future premiums, or to the consumer’s employer.

“When consumers pay a premium to a health insurance company, they should expect that those hard-earned dollars will be spent primarily on patient care—not executive salaries, advertisements, or excessive overhead,” Harkin said. “Thanks to the Affordable Care Act, if insurers choose to spend premium dollars differently, they must provide a partial refund to consumers. This is about consumers getting the biggest bang for their health care buck, and today’s report is yet another example of how the ACA is putting consumers in the driver’s seat when it comes to their health coverage.”

According to HHS, this new standard and other Affordable Care Act policies contributed to consumers saving approximately $3.9 billion on premiums in 2012, for a total of $5 billion in savings since the program’s inception.  As Chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, Harkin played a pivotal role in the Senate passage of the health reform bill.

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