Texas employers and consumers are projected to receive the largest combined rebates of any state from health insurers who spent more on administrative expenses (executive salaries, marketing) and profits in 2011 than allowed by the Affordable Care Act. There’s a fact sheet about the “medical loss ratio” on HealthCare.gov, a site managed by the U.S. Department of Health and Human Services.

One of the most important consumer protection provisions of the Affordable Care Act requires health insurers to pay 80 to 85 percent of premium dollars for medical care expenses and quality improvement activities. Starting last year, insurance companies that spend less that the minimum MLR (80 percent for small-group plans and 85 percent for large-group coverage) must repay policy holders.

At some point this year, the “medical loss ratio” or MLR for each insurance company will be reported on HealthCare.gov.

A new analysis by the Kaiser Family Foundation found that an estimated $1.3 billion should be received by August by consumers nationwide, with Texas receiving $186 million, the largest combined rebate of any state. About 92 percent of Texas customers in the individual market can expect money back – the highest share of any state according to Kaiser – and each policyholder in that category is projected to receive an average $178.

Nationwide, the rebates include $541 million in the large employer market, $377 million in the small business market and $426 million for those buying insurance on their own, Kaiser projected. The average U.S. consumer in the individual market receiving a rebate will get about $127, though folks in Alaska and Maryland have the highest estimate average at about $300.

According to the Kaiser report:

“Rebates in the group market will generally be provided to employers, and in some cases be passed on to employees as well.”

In this brief issued last month, The Commonwealth Fund found that if the rule had been in effect for 2010, consumers nationwide would have received $2 billion in rebates, including almost $1 billion divided among 5.3 million people. Another $1 billion would have been paid to policies covering 10 million people in the small and large group markets.

The MLR may not apply in every state, since some have received waivers because of little insurance company competition. In January, the U.S. Department of Health and Human Services denied Texas’ waiver application that asked for a 71 percent MLR in 2011 that increased to 80 percent in 2014.


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