A recent report from the Commonwealth Fund predicts that, if the Medical Loss Ratio (MLR) provision of the Affordable Care Act had gone into effect in 2010, consumers would have gotten $2 billion back from insurance companies last year.
You read that right: Insurance companies would have given consumers a $2 billion refund. But what the heck is MLR? This wonky term simply means that insurers have to spend the majority of your premium dollars on health care and improving quality, instead of profits, advertising, or other administrative expenses.
Prior to the Affordable Care Act, in most states there was no system for making sure that the consumers’ premiums actually went toward their health care expenses and not into the pockets of insurance company CEOs. Thanks to Obamacare, insurers must spend at least 80 percent of premium dollars on health care expenses. Any less than that, and they are required to send their customers a refund to make up the difference.
The Commonwealth Fund calculated that difference using data from 2010, one year before the MLR regulations took effect in January of 2011. Although consumers will not receive refunds from 2010, many will see checks in the mail this summer based on how insurance companies spent premium dollars in 2011.
But what happens if the Affordable Care Act is repealed, either by actions in Congress or the Supreme Court’s decision? In most states , there will be nothing to stop insurance companies from keeping as much as they want of premium dollars as profit. Based on the report’s prediction, repealing the Affordable Care Act could cost consumers as much as $2 billion a year.
That’s a price that Americans can’t afford to pay, and it’s much, much higher when combined with the cost of losing other consumer protections in the Affordable Care Act. Without provisions like the MLR, guaranteed coverage for kids with pre-existing conditions, and the option for young adults to stay on their parents’ health plan, real people are vulnerable. People are the heart of Obamacare, and we need to do everything we can to protect them.