Provision will provide some Minnesotans with rebates

Franken’s medical loss ratio provision ensures that insurance companies spend 80 to 85 percent of the premium dollars they collect on actual health care, instead of marketing, CEO bonuses, and overhead. Insurers not meeting the MLR threshold must issue rebates to their customers, according to Franken’s office. This will not only benefit those who get rebates, but has also kept premium increases in check for families and businesses and will improve the overall quality of care, notes Franken.

The provision will mean that nearly 13 million Americans will benefit from $1.1 billion in rebates from insurance companies this summer. More than 123,000 Minnesotans will benefit from nearly $9 million in total rebates. Some will get a check from their insurance company, averaging about $160, while others will benefit from reduced premiums next year.

Insurance companies that did not meet this threshold for 2011 must rebate their policy holders no later than Aug. 1, 2012.

Franken said the rebate is great news for consumers, who will no longer have to foot the bill for the excessive spending of their health insurance company.

“Before my medical loss ratio provision was implemented, far too many of the health insurance premium dollars that Americans paid went to things like executive bonuses, marketing, and administrative costs — not to actual health care,” said Franken. “But because of my provision in the health reform law, insurance companies are now forced to spend a higher percentage of premium dollars on health care, or provide refunds when customers are overcharged.”

Franken authored the MLR provision during the debate on health care reform. It was inspired by Minnesota’s long-standing medical loss ratio law and the state’s non-profit health insurers, which lead the nation in keeping administrative costs low.