People who bought their own health insurance last year saved $2.1 billion because of the federal health law, mainly because of a provision that limits how much of their premium can go to insurers’ administration and profits, says a report out today from the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)
The researchers estimate that premiums for the 11 million Americans who buy their own insurance would have been $1.9 billion higher in 2012 without the law. Some consumers will also see rebates estimated at $241 million, which will be sent out later this year. While not every consumer saw savings or a rebate, the researchers estimated that the savings averaged $204 per person.
The main reason for the savings was attributed to a provision requiring insurers to issue rebates to consumers if they fail to spend at least 80 percent of every premium dollar on medical care and quality.
“One may or may not support the law or this provision in particular, but it’s had the clear effect of keeping premiums down and lowering the amount of premium that goes to cost and profits,” said co-author Larry Levitt.
Others, however, questioned the findings.
Robert Laszewski, a former insurance industry executive who now provides consulting services to insurers, said slowed premium increases are more likely a consequence of a years-long trend of declining use of medical care related to the sputtering economy.
Another factor, he added, was that insurers sharply reduced commissions paid to agents and brokers as a way to hold down premium increases and meet the requirements of the law.
“This is Obamacare cheerleading because it doesn’t put the facts in context,” Laszewski said. “Industry profits are at historic highs, so these rebates have not had an effect on profitability. What they’ve done is cut agents and brokers.”
America’s Health Insurance Plans, the industry trade group, did not have an immediate comment on the report. But it has been critical of the provision requiring rebates in the past, saying it places “arbitrary caps” on what insurers can spend on services that could help patients and does nothing to affect the true factors behind rising health care spending.