Under a final rule released by HHS on Friday, health insurers must inform customers who receive a premium rebate this summer that the funds are a result of the medical-loss ratio rule under the federal health reform law, the Wall Street Journal reports.
Under the MLR rule, private insurers must spend at least 80% in the individual market or 85% in the group market of premium dollars on direct medical costs. Insurers that do not comply with the ratio must issue rebates to consumers.
Rebates are projected to total about $1.3 billion and will be mailed to approximately 16 million individuals who either purchase their own coverage or are covered by an employer, according to estimates by the Kaiser Family Foundation.
The finalized rule states that letters from the insurers to the rebate recipients must state in the first paragraph of the mailing, "This letter is to inform you that you will receive a rebate of a portion of your health insurance premiums. This rebate is required by the Affordable Care Act -- the health reform law."
The rule also requires insurers to send a generalized letter to individuals who do not receive a rebate, explaining that they do not qualify because the insurer has met the goals outlined in the health reform law.
MLR Rebates as a Campaign Issue
According to the Journal, the rule is an attempt by the Obama administration to boost the popularity of the health reform law ahead of the November election (Radnofsky, Wall Street Journal, 5/11). According to Time's "The Page," senior Obama campaign officials cited the rebate checks as a "stealth weapon" to mold public opinion on the overhaul.
Meanwhile, Democratic strategists are pleased that the checks and the letters will come directly from insurers, possibly deflecting the notion that the administration is using the rebates for political gain.
Further, the political effect in swing states could be significant, according to "The Page." For example, more than 1.7 million Florida residents are expected to receive rebates of more than $148 million (Halperin, "The Page," Time, 5/11).
Republicans countered that the provision would do little to sway public opinion on the overhaul.
Chris Jacobs, a health policy analyst for Senate Republicans, said, "Given that candidate Obama promised premiums would go down by $2,500, how does a $127 rebate check represent a 'game changer?'" (Wall Street Journal, 5/11).