Got An ACA Plan? Might Be Getting A Rebate for 2020 Premiums Paid.

[GailL1]

Since 2020 because of the pandemic had lower than normal medical expenditures, health insurers in the ACA Individual Marketplace are having a difficult time with meeting their 2020 Medical Loss Ratio.

The Affordable Care Act requires health insurance issuers to submit data on the proportion of premium revenues spent on clinical services and quality improvement, also known as the Medical Loss Ratio (MLR). It also requires them to issue rebates to enrollees if this percentage does not meet minimum standards. The Affordable Care Act requires insurance companies to spend at least 80% or 85% of premium dollars on medical care, with the rate review provisions imposing tighter limits on health insurance rate increases. If an issuer fails to meet the applicable MLR standard in any given year, the issuer is required to provide a rebate to its customers.

CMS - Medical Loss Ratio 

In 2020, because of stay at home orders or social distancing due to the pandemic, people did not go to the doctor as much as normal.  Hospitals cancelled many elective surgeries adding to the lower use of medical care.

So maybe you might get some of your ACA individual insurance plan premiums back later this fall. But don't get too comfortable cause what comes down may again go up - we really haven't changed much else.

[Roxanna35]

I am too old to deal with the ACA but I do know that my grandmother  says that she cannot afford the ACA with her daughter too expensive. We need a comprehensive national healh care system that will be able to secure  health insurance for all but please not Medicare for all.
By the way Gail. your posts on health insurance and medicare are missed. we would love to see you

[GailL1]

@Roxanna35   A little confusing for the topic.

Your grandmother ???  How old is she?

A national health care system is OFF TOPIC in this thread.  Perhaps start another with that topic.  

I am still right here @Roxanna35 , where are you?

[Roxanna35]

@Gai;   as usual  we are at odd on  Health Care after all these years.  The ACA is the first step to what it should eventually transform  into a National Health Care system. I am completely agains. Medicare for all. as you well know. but, interest to see the expansion of health care for all. Oh, I am here to discuss health care,  for for other discussions you know where to find me. I do have a very expansive mind.

[GailL1]

@Roxanna35 

My initial post here was NOT to discuss any health care system.  Rather it was to post some information to those who may have an ACA plan and get a refund of some of their premiums later on this year.  

IF you and any others want to discuss some "health care system", just start a new topic on it and I am sure that you will get some participation.

Staying on a topic helps to keep the information clear and accessible to those who may want the information without all of the off topic discussion.

[john258]

How can you be against something you are taking part in . Everyone can go to the ER and get medical treatment wheather you can pay or not. I call it the ER care section. The wort outcomes, and highest cost part of our Medicare for all system.

The virus has shown us you have to treat all or you will not solve health care problems. That means you look at an under 65 health care part to replace what we now have,

[Roxanna35]

@john258 was your response to me? or other poster?

[john258]

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@Roxanna35 wrote:

@john258 was your response to me? or other poster?

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It was to you. Something to think about.

[john258]

What really took place was the rates were to high and the Carriers made to much profit. The ACA was designed to end that. At one time when the loss ratio got over 60% the Carriers started to look at raising rates. The profit on a policy some years ago at one Carrier I know of was 18% and to get that you needed to have a loss ratio around 60%.

Just think there were people telling us how bad the ACA was and should have never been passed,  and it would lead to the end of medical insurance. How times have changed, and now we see some of the people who took that line now praising the ACA. Wounder if we will ever see them say that they were wrong about the ACA.

[GailL1]

You will have to admit that 2020 was an unusual year.  When the rates were set in 2019, we had no idea of the pandemic and its repercussions on the health care industry or insurers.

Most of 2020 had (most) insurers charging no copays for Covid treatments with testing and vaccines being also completely covered. Then there was also people NOT seeking treatment or even preventive care in 2020 and hospitals not performing many treatments and surgeries, unless an emergency.

That has changed now.  So maybe a more normal year but it is still gonna be hard for insurers to assure their rates for 2021/2022 are pretty much correct and not over or under the MLR.  Just gonna take time for all the numbers to get back to normal 

KHN 04/26/2021 Time to Say Goodbye to Some Insurers Waivers for Covid Treatment Fees   

[Tonster521]

@john258 

It is not clear if you are referencing one unique policy or the health insurance industry. If the number you provided are accurate and true, that is one unbelievable policy. As a general point, health insurance is a low margin business, maybe 6% to 7% in a good year, depending upon investment returns on the cash flow (premiums). Most recently, net profits are less inasmuch as reserves are invested in low interest rate bonds ( Treasuries,etc.). Hopefully, I am including a link from the NAIC that provides the most current data that I could find with an internet search. https://naic.org/documents/topic_insurance_industry_snapshots_2018_health_ins_ind_report.pdf The most recent year available is 2018 wherein net profit margins were about 3% for the health insurance industry. I don't believe there has been a reduction of health insurance costs since 2018. There may have been a reduction in claims as @GaiL1 pointed out which could explain/provide the reason that health insurance companies had lower loss ratios. Lastly, are you referencing Operating Margins or Net Profit Margins of 18% or you don't know?

[john258]

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@Tonster521 wrote:

@john258 

It is not clear if you are referencing one unique policy or the health insurance industry. If the number you provided are accurate and true, that is one unbelievable policy. As a general point, health insurance is a low margin business, maybe 6% to 7% in a good year, depending upon investment returns on the cash flow (premiums). Most recently, net profits are less inasmuch as reserves are invested in low interest rate bonds ( Treasuries,etc.). Hopefully, I am including a link from the NAIC that provides the most current data that I could find with an internet search. https://naic.org/documents/topic_insurance_industry_snapshots_2018_health_ins_ind_report.pdf The most recent year available is 2018 wherein net profit margins were about 3% for the health insurance industry. I don't believe there has been a reduction of health insurance costs since 2018. There may have been a reduction in claims as @GaiL1 pointed out which could explain/provide the reason that health insurance companies had lower loss ratios. Lastly, are you referencing Operating Margins or Net Profit Margins of 18% or you don't know?

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Having worked in the industry for over 40 years it is true. That is the number they were looking for. If you understand the way rates are made they take in to account income from reserves so that reduces it some but not much. Why do you think the ACA increased the loss ration to 80%. It proves what I tell you is true.

[Tonster521]

@john258 

There is no doubt that the ACA provided a program for lower income folks to obtain health insurance coverage especially folks with preexisting conditions. As you know, prior to the ACA, the only organizations accepting such adverse risk were self-insured employee benefit plans where I spent 31 years. Most large employers accepted that uncertainty or risk whether by Union contract or an employer wanted that non-represented person with certain skills/knowledge/talents. So, in the individual and small group markets, where self-insurance is not common, the insurance industry now had to develop methods for pricing for such adverse risk if they wanted to participate in those markets pursuant to the  ACA. which was a new approach. Moreover, the ACA needed those insurers to provide insurance coverage/policies in the individual and small group markets. In sort of a fairness approach, the ACA established Medical Loss Ratios (MLR) of 80% for individual and small groups and 85% for large groups so insurers would not overcharge. On the other hand, the ACA provided risk corridors (three years)  that would reimburse insurers for losses that exceeded certain levels (vary throughout the country). The three years should provide insurers with enough utilization data to develop appropriate rates. Congress delayed reimbursing the insurers who experienced losses. And, law suits began. I have included a link to one of many articles that appeared in April 2020 after the Supreme Court ruled that the government owes insurers about $12 Billion in losses from this first three years of ACA. In the article, there is a link to read the actual 43 page Supreme Court ruling should you elect to follow the issue. https://www.cnbc.com/2020/04/27/supreme-court-sides-with-insurers-in-12-billion-obamacare-case.htmlT... bottom line is that insurers lost billions providing insurance benefits pursuant to the ACA, substantially more than any reconciliations of the 80% and 85% MLR. As a person in the industry, what would you do to protect your company from such losses? Obviously, increase your premiums. Your losses pursuant to the MLR will be a fraction, if any, as compared to the losses of hospital, medical/surgical, and prescription drug claims. With approximately 2700 organizations in the ACA insurance business, it is inevitable that one may find an organization or two that had a significant MLR rebate. However , the insurance industry, as a whole, has lost more money ($12 Billion) with ACA which means taxpayers are the ultimate payers of the ACA failure.

[john258]

Whenever an Insurance Carrier enters a new field the first few years are ones the Carrier might need help with. They usually provide this help if needed from their other lines of business so nothing new. This time the govt. was making them follow a new path in the health care field so provided the help that they would have normally gotten from their other lines. The govt. did this to keep Carriers writing health Insurance.

You have to keep in mind that the ACA was not implemented as first written, and this could and my guess is this is part of the total problem. States did not have to expand Medicaid as called for in early drafts, and there were other changes which effected the law.  The govt sponsored providers became private and were treated as non profit till some time after the law was in force. Then it was ruled the loans which they got were not an asset but had to be repaid so they became a liability and most were forced out of business by State laws on finical condition required of insurance Carriers.

All insurance Carriers can loose money the first few years of a new line. They did not loose what you say as they did not put up their own money. The govt. lost.

You can not read an article on one small part of something and try an make it cover the total problem. You have to understand the entire problem. Do not be surprised if you see some big rate increases before to long as Trump gutted the ACA and that should show up or due to the virus changes it might not. The 80% loss ratio is a great thing. In time they will take it to at least 90%. The cheapest approach is a medicare for all under 65 as that will reduce the costs in the health care total system, plus in a lot of other systems where you have health care costs hidden.

[Tonster521]

Here is the article, the link got messed up. https://www.cnbc.com/2020/04/27/supreme-court-sides-with-insurers-in-12-billion-obamacare-case.html