One piece of health care reform that passed last March took aim at insurers’ profit margins. In the individual Florida health insurance market (that’s policies purchased by those without group coverage), premiums could look a lot better for consumers.
In Florida, health insurance companies will be held accountable for the amount of premiums they spend on their members’ health care. If their overhead costs or profits are excessive, insurers will be required to issue refunds to members. The refunds may come in the form of checks or credits for exceeding a new 80-percent rule in 2011, and the refunds are due by August 1, 2012.
Florida insurers are being required to spend at least 80 percent of revenue on actual medical care. That leaves them 20 percent to cover administration, sales commissions to agents and brokers, and advertising and marketing. Of course, this stands to cut into their profits. Will insurance companies return any money to help lower premiums?
Rebates On Health Insurance For Florida Premiums Are Still In Doubt
As the law now stands, refund checks will be due in the summer of 2012, but some officials in Florida are working to forestall refunds for up to three additional years. A spokesman for the Florida Alliance for Retired Americans and Florida Public Interest Research Group isn’t very optimistic. As a retired health official for Florida, Richard Polangin monitors health issues. He’s only expecting a dribble of refunds in the individual market.
With a large number of jobs in Florida focused on the service industry, many people do not have health care through employment-based group policies. Federal officials have projected that as many as nine million U.S. citizens could benefit from $1.4 billion worth of refunds. That’s good new for Florida residents because the officials estimated that about half of those paying for their own insurance would be entitled to a refund under the new health care reform law.
How Much Have Florida Health Insurance Plans Returned To Members?
Before health care reform, Florida State officials let health insurers keep a much greater percent of their revenue to spend on overhead and/or to keep as profit. One of the largest health insurance providers, United Healthcare, kept 40 percent of the premiums collected for its Golden Rule individual policies last year.
If health care reform had been in place then, the 117,000 Florida residents who bought those policies would have enjoyed around $38 million worth of refunds, according to CITI Investment Research. » Read more: What Does Reform Mean For Florida Health Insurance Premiums?
