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Health insurers owe Floridians tens of millions, report says

Health insurance companies owe Florida policyholders tens of millions of dollars for failing to meet a provision of the Affordable Care Act that limits the amount of premium dollars that can be spent on overhead, according to new estimates.

The Kaiser Family Foundation recently issued a report that said insurers will owe Floridians nearly $149 million in rebates this summer for failing to meet the medical loss ratio rule found in the federal health care overhaul. The nationwide rebate total is $1.3 billion, according to Kaiser, a non-partisan organization that analyzes health policy.

Under the MLR provision, insurers offering health coverage to individuals and small businesses must spend at least 80 percent of premiums on claims and direct services. The threshold for large group plans is 85 percent of premium dollars. Insurers who failed to meet those requirements in 2011 must issue rebates to consumers in August. Florida unsucessfully petitioned the federal government for flexibiilty under the rule for individual plans.

Companies are required to submit a report to the U.S. Department of Health and Human Services by June 1 showing what they spent on health care and activities that improve care during 2011. They must provide rebate notices and issue rebates by August 1.

Consumers Union, the policy and advocacy division of Consumer Reports, and Florida CHAIN, a statewide health advocacy group, issued a report today that provides new estimates for what individual companies may owe. Among the insurers on the hook for rebates: Florida Blue (formerly known as Blue Cross and Blue Shield of Florida), $44.9 million; UnitedHealthcare, $19.9 million; Golden Rule, $15.7 million; and Humana $12.3 million.

The news release from Consumers Union and Florida CHAIN said Florida insurers were being forced to spend more premium dollars on medical care and some were even reducing rates as a result.

"There is evidence in Florida that the new higher MLR standard is leading some companies to trim rate increases as a result of the new MLR rule. Humana, for example, requested average rate reductions as high as 12 percent 'in order to meet the 80 percent minimum loss ratio standard' for Florida individual market customers, according to the company’s rate filing," the release said.