Professor Mark Hall’s health insurance study cited in Arizona Daily News

Photo of Professor Mark Hall

Professor Mark Hall

Some Arizonans will be getting money back from their health insurance companies this summer.

In order to comply with a federal law, health insurers must pay $11 million in refunds to nearly 350,000 Arizona consumers, the U.S. Department of Health and Human Services says. The average is $51 per family, federal data shows.

The money is coming via a provision in the Affordable Care Act that requires insurers to spend no more than 20 percent of premium dollars on profits and red tape. If insurers went over 20 percent in 2013, they owe money back to their policy holders.

The following are Arizona insurers paying back money. Not everyone who holds a policy with the companies will receive a refund, since in some cases only certain types of policies like small or large groups were affected:

  • Blue Cross and Blue Shield of Arizona, $2.7 million (small group)
  • Companion Life Insurance Company, $107,954 (individual)
  • Connecticut General Life Insurance Company, $120,425 (large group)
  • Golden Rule Insurance Company, $376,876 (individual)
  • Humana Health Plan Inc., $1.6 million (small and large group)
  • Humana Insurance Company, Inc., $2.7 million (individual and small group)
  • John Alden Life Insurance Company, $809,414 (small and large group)
  • Madison National Life Insurance Company Inc., $1 million (individual and small group)
  • Standard Security Life Insurance Company of New York, $15,754 (individual)
  • The MEGA Life and Health Insurance Company, $260,917 (individual)
  • Trustmark Life Insurance Company, $809,673 (small and large group)
  • United Healthcare Life Insurance Company, $419,243 (large group)
  • United Healthcare Insurance Company, $$8,351 (individual)

Not all policyholders will be getting a check in the mail, however. The refunds will be sent to consumers through one of four ways:

  • A refund check in the mail
  • A lump sum reimbursement to the debit or credit account used to pay the premium
  • A reduction in future premiums
  • Improved health coverage from employers

Nearly 7 million consumers nationwide are getting $330 million in refunds this year. The average national refund is $80 per family, federal officials say.

Officials with the U.S. Department of Health and Human Services say that since the 80/20 rule took effect in 2011, more insurers are meeting the standard. The 80/20 rule is also known as the federal medical loss ratio.

A study of the rule’s first two years released by The Commonwealth Fund in May found insurers have been reducing profits and spending on brokers’ fees, marketing and other administrative items since the rule took effect. Insurers gave out $513 in consumer rebates in 2012, down from the 2011 total of $1 billion.

The study, completed by researchers Michael McCue of Virginia Commonwealth University and Mark Hall of Wake Forest School of Law, analyzed the impact of the medical loss ratio provision on consumers.

The report looked at insurers’ filings with the U.S. Centers for Medicare and Medicaid Services. Among other findings:

  • Consumer rebates dropped most substantially in the large group market, falling 71 percent between 2011 and 2012.
  • Expenses for insurance brokers, which amount to about three percent of premiums, dropped by almost $300 million across all three markets in 2012.
  • Insurers’ total profits decreased by $300 million in 2012, or about 0.1 percent of premiums, as group insurance still earned a profit of 2.5 percent to 3 percent, which were offset by small losses in the individual market.

View this article on Arizona Daily News.