Don’t spend it all in one place.
Thousands of Nevadans may be in line for health-insurance rebates in August, but a California research group says the rebates will pale in comparison to the cost of coverage.
The Kaiser Family Foundation says more than 75,000 Nevadans could get $96 to $126 back from insurers, based on a rule in President Barack Obama’s health-care law that requires insurers to spend at least 80 percent of premiums on medical care and quality improvement or return the difference to consumers and employers.
But Nevada’s rebates would average a fraction of premium expenses. The Nevada Division of Insurance doesn’t track average premiums for individuals and small-group plans, but the U.S. Department of Health and Human Services quotes monthly premiums of $203 to $362 for Nevadans 35 and older who buy basic, individual coverage for people with pre-existing conditions.
Still, Kaiser researchers said the money could help some consumers.
"This in and of itself isn’t going to be the magic bullet that controls health-care spending, but it will likely make a difference for people who get the rebates," said Cynthia Cox, Rosenfield Fellow in Health Policy and Public Health at the Kaiser Family Foundation.
In Nevada, rebate eligibility is limited to individual plans and plans with fewer than 50 people. That’s because large group plans already comply with the rule, Cox said.
Nor does the regulation apply to self-insured companies. Nearly 40 percent of Nevadans work for self-insured employers, according to the state Insurance Division.
Cox also said that some insurers may apply the rebate to future premiums rather than cutting checks to customers. And consumers insured through their company may have to split some of the rebate with their employer.
Jake Sunderland, a spokesman for the state Insurance Division, cautioned that the foundation’s figures were estimates. Actual numbers won’t be in until after June 1, when insurers file final claims reports.
Insurers will notify consumers getting rebates by mail in early summer, and begin issuing checks or premium credits in July.
Nationally, rebates should average $127 for the people who get them, and Democrats are hoping they’ll send an election-year message that Obama’s much-criticized health care overhaul is starting to pay dividends for consumers. Critics of the law call that wishful thinking.
Although many large employer plans already meet the standard, it’s the first time the government has imposed such a requirement on the entire health insurance industry.
"This is one of the most tangible benefits of the health reform law that consumers will have seen to date," said Larry Levitt, an expert on private insurance with the Kaiser Family Foundation, which analyzed industry filings with state health insurance commissioners to produce its report. Kaiser is a nonpartisan information clearinghouse on the nation’s health care system.
Still, health insurance is expensive, and $127 may not even pay a month’s worth of premiums for single coverage.
And the insurance industry says consumers should take little comfort from the rebates because premiums are likely to go up because of new benefits and other requirements of the law.
"The net of all the requirements will be an increase in costs for consumers," said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the main industry trade group.
"Given that health care costs are inherently unpredictable, it’s not surprising that some plans will be paying rebates to policyholders in certain markets," Zirkelbach added.
NEVADA GRANTED ADJUSTMENT
Seventeen states applied for waivers from the 80 percent standard, producing evidence that it would destabilize their private health insurance markets. Federal regulators granted adjustments to seven states including Nevada, usually meeting each state’s request part way.
Cox said the waiver might explain why Nevada’s estimated average rebate for individuals is $30 less than the national average.
The Kaiser report also said the rebate requirement may be acting as a brake on the industry, discouraging insurers from seeking big premium increases to avoid refunds and possible criticism later.
The new law has "provided an incentive for insurers to seek lower premium increases than they would have otherwise," the report said. "This ‘sentinel’ effect on premiums has likely produced more savings for consumers and employers than the rebates themselves."
The study found the largest rebates will go to consumers and employers in Texas ($186 million) and Florida ($149 million). Hawaii is the only state in which insurers are not expected to issue a rebate. Nevada rebates will total $8.8 million.
Here’s how the rebates break down nationally:
More than 3 million individual policyholders will reap rebates of $426 million, averaging $127 apiece. Consumers in Texas, Oklahoma, South Carolina and Arizona are most likely to be eligible.
In the small-employer market, plans covering nearly 5 million people will receive rebates totaling $377 million.
Insurers serving large employers face a stiffer requirement. Under the law, they must spend 85 percent of premiums on medical costs. The study found that 125 plans covering 7.5 million people at large employers will give back a total of $541 million.
Separately, a Goldman Sachs report estimated insurers would pay rebates of $1.2 billion. Among major insurers, UnitedHealth would pay $307 million, Aetna $177 million, WellPoint $94 million and Coventry $50 million.
Supporters of the requirement say it will keep insures from padding their profits at the expense of unsuspecting consumers.
"Millions are benefiting because health insurance companies are spending less money on executive salaries and administrative costs and more on patient care," said Sen. Jay Rockefeller, D-W.Va., a leading rebate provision advocate.
White House spokesman Jay Carney said the report shows how Obama’s law is "already strengthening the health care system for millions of Americans."
But like everything else about the overhaul, the future of the rebates depends on whether the Supreme Court upholds the law in a decision expected by early summer.
The Associated Press contributed to this report.