Paul Sancya, File, Associated Press
WASHINGTON — More than 3 million health insurance policyholders and thousands of employers will share $1.3 billion in rebates this year, thanks to President Barack Obama's health care law, a nonpartisan research group said Thursday.
The 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.
The law requires insurance companies to spend at least 80 percent of the premiums they collect on medical care and quality improvement or return the difference to consumers and employers. Although many large employer plans already meet that 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, with employer coverage averaging about $5,400 a year for an individual, $15,100 for a family, $127 isn't a whole lot of money. It amounts to 2 percent of an individual plan, and a little less than 1 percent of the family premium.
And the insurance industry says consumers should take little comfort from the rebates because premiums are likely to go up overall as a result 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.
But the Kaiser report said the rebate requirement may be acting as a brake on the industry, discouraging insurers from seeking big premium increases to avoid having to issue refunds later and face possible criticism.
"The presence of these thresholds and the corresponding rebate requirement have 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), where Govs. Rick Perry and Rick Scott have been among the staunchest opponents of the federal law. Both states applied for waivers from the 80 percent requirement and were turned down. Hawaii is the only state in which insurers are not expected to issue a rebate.
Here's how the rebates break down nationally:
More than 3 million individual policyholders will reap rebates of $426 million, averaging $127 apiece. These are consumers who are not covered through an employer and buy their policy directly. Consumers in Texas, Oklahoma, South Carolina and Arizona are most likely to be eligible.
Insurance companies must notify policyholders, and the rebates are due by Aug. 1. Some companies have already begun to pay.
In the small-employer market, plans covering nearly 5 million people will receive rebates totaling $377 million.
Employers do not have to pass their rebates on to workers, and can also take them as a discount on next year's premiums.
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