Rep Lewis Praises Rule Requiring More Dollars Spent on Healthcare, Less on Profit
Washington, DC - Insurance companies are making more profits than ever but people are finding that it's at their expense. Premiums are higher but fewer services are covered and out-of-pocket costs are higher. Because of the "Affordable Care Act" passed by Congress and signed into law by President Obama this year, insurance companies must now spend more of your premium dollars on paying your medical bills and less money on things like marketing, executive compensation, and administrative costs.
Congressman Lewis praised the new Health and Human Services regulation which will require companies for the first time, to publicly report how they spend your health care premiums.
"Today's HHS announcement restores some fairness to health insurance - more of your premium dollars will be spent on you and your family's medical care, instead of on insurance company profits, marketing and administrative costs," said Rep. Lewis.
These "medical loss ratio" provisions require health insurers to spend 80 to 85 percent of consumers' premiums on direct care for patients and efforts to improve care quality. If they don't, the insurance companies will be required to provide a rebate to their customers starting in 2012. These regulations also provide consumers more transparency.
Today, many insurance companies spend a substantial portion of consumers' premium dollars on administrative costs and profits, including executive salaries, overhead, and marketing. Specifically, currently in the individual market, more than 20 percent of consumers are in plans that spend more than 30 cents of every premium dollar on administrative costs and an additional 25 percent of consumers are in plans that spend between 25 and 30 cents of every premium dollar on administrative costs. Under these new protections, millions of Americans will begin getting better value for their premium dollar.
The implementation of these new consumer protections will begin on January 1, 2011 - with rebates beginning in 2012.
These important consumer protections are another example of how health reform is helping Americans even before full implementation of the law in 2014. Since health reform was enacted in March, numerous provisions have taken effect, including:
· More than 1.8 million seniors who have fallen into the Medicare prescription drug ‘donut hole' coverage gap have received a $250 rebate check to help pay for their prescription drugs.
· This year, up to 4 million small businesses are eligible for small business tax credits to help pay for health insurance premiums for their employees if they choose to offer coverage.
· Nearly 3,600 employers are now participating in the Early Retiree Reinsurance Program, which is designed to retain early retiree health plans until full reform is implemented in 2014 by providing financial assistance for employer health plans offered to early retirees.
· Many Americans with pre-existing conditions now have access to federally-subsidized Pre-Existing Condition Plans, which exist in every state.
· Millions of Americans are now receiving the benefits of the Patient's Bill of Rights, which went into effect for plan years beginning on or after September 23, 2010. Among its many provisions, the Patient's Bill of Rights:
o Prohibits insurers from dropping people when they get sick.
o Requires insurers to allow parents to keep their young adult children up to age 26 on their health plan as their children work to launch their careers.
o Bans insurers from putting lifetime limits on coverage.
o Bans insurers from denying coverage to children with pre-existing conditions; and
o Requires insurers to cover key preventive services, such as mammograms and immunizations, without deductibles or co-payments.
"This new rule helps the American people take control of their health care, which has long been in the hands of insurance companies, who were working for their shareholders, not their policyholders," said Rep. Lewis. "If the House Republicans follow through on their pledge to repeal health reform, they would end these new consumer protections and would allow insurance companies to continue unlimited spending on CEO bonuses and profits -- and less on patients' health care. Democrats will continue to fight to protect the progress we have made for our nation, especially health care reform."