An estimated $16.8 million rebates will be given to Wisconsin businesses and consumers this year from health insurers. This is due to these health insurers spending more on administrative expenses and made more profits than allowed under the health care overhaul from 2010. It is expected that approximately 365,395 rebates will be given to Wisconsin residents.
Some believe this shows that insurance companies who put their premium dollars income towards patient care rather than administration are more effective. Others feel that with the healthcare overhaul that has taken place, coverage disruptions along with other consequences due to new spending requirements will outweigh any benefits seen by the overhaul. They also feel that new benefits Wisconsin insurance companies will be required to provide are going to raise insurance premiums more than the required rebates will lower them.
The Affordable Care Act requires insurance companies that sell individual or small group plans, to spend at least 80 percent of the premiums they collect on medical care. At least 85 percent of premiums need to be spent on medical care for large groups. Any insurance company falling short of those minimums are required to issue rebates to Wisconsin consumers by August.
The law did allow states to request for the government to waive the rule for individual plans if they could prove that the 80 percent required would be too difficult. Seven sates received the waiver. Wisconsin did apply for a waiver, but the US Department of Health and Human Services said the state did not show the requirement would threaten the Wisconsin market.
Wisconsin healthcare providers expecting to pay rebates will be giving each consumer holding individual plans an average of $82. The small group market will be likely to receive an average of $28 per enrollee and the large group market $57. The group market rebates could be passed on to the employees by their employer.
I wonder if the cost of complying with this law, and issuing these rebates will ultimately cost Wisconsin residents more for their health insurance? Think about it, if you collect $100 and have to pass on $80, you only have $20 left for administrative expenses and profit. If you charge $120, 20% of that is $24 left over.