Health insurance companies have been through a lot in the last few years, as the various machinations of the Patient Protection and Affordable Care Act have been enacted at different times. And while there were likely many headaches along the way, it seems that many of the reforms may be providing benefits to the industry as a whole.
The value of consumer rebates paid to policyholders by health insurance companies in 2013 - the most recent year for which data was available - came to $325 million, according to the latest study of Federal Medical Loss Ratios from researchers Michael McCue of Virginia Commonwealth University and Mark Hall of Wake Forest School of Law on behalf of the Commonwealth Fund. That number was down appreciably from the $513 million seen the year before, as well as the more than $1 billion doled out in 2011.
That reflects health insurance companies generally doing a much better job of complying with the new government regulation requiring them to spend at least 80 percent to 85 percent, depending upon the type of coverage involved, on medical care and improvement of plans, the report said. In each of the three years examined since that rule went into place, though, less than 1 percent of premiums were spent on quality improvements.
What does this mean?
Commonwealth Fund president Dr. David Blumenthal noted that insurers will likely find themselves in a better position going forward thanks (in part) to these changes, because it highlights that they can both improve coverage for consumers - which generally leads to greater satisfaction - while still allowing them to stay competitive, the report said. The more that can be done to encourage quality improvement in the industry as a whole, the more it could help to make people feel as though they're getting value for their premium dollars. McCue further added that additional data shows insurers are still as profitable as they ever were even as their expenses come down.
This may be very good news for the industry as a whole, especially going forward, because it may create some significant room for growth in terms of consumers' appreciation for what their health insurance companies can provide them. By continually demonstrating the importance of coverage, and giving consumers more value for each dollar, insurers may be able to go a long way as more people sign up for coverage.