“We applaud Secretary Sebelius and the Department of Health and Human Services (HHS) for focusing on the needs of individuals and families in the regulations released today requiring insurance companies to spend 80 to 85 percent of consumers’ premiums on medical care and efforts to improve care quality, rather than profits, marketing and administrative functions.

“The Affordable Care Act (ACA) established the medical loss ratio (MLR) provision to make the insurance marketplace more transparent and make it easier for consumers to purchase plans that provide better value for their money.

“The MLR regulations, effective January 1, 2011, followed National Association of Insurance Commissioners’ (NAIC) open, transparent and balanced process. Consumer representatives worked with the NAIC while it spent months deliberating over MLRs, and HHS largely took their recommendations. 

“Strong MLR regulations give people across the country peace of mind that their health insurance dollars are going to their medical care, not insurance company salaries and profits. This provision also makes insurance company reports on how premiums are spent more transparent.

“And if insurers do not meet the new MLR standard, they have to provide rebates to policyholders. HHS estimates that in 2012, up to 9 million people could receive rebates from their insurer. 

“The regulations allow some transition periods for insurance markets between now and 2014, when more comprehensive insurance reforms go into effect and subsidies will be available. While this did modify requirements for some plans from the MLR rules, this is a great step in the direction of protecting consumers and curbing some insurance companies’ bad practices.” 

For more information, visit www.healthcare.gov/news/factsheets/medical_loss_ratio.html.

About Community Catalyst
Community Catalyst is a national non-profit advocacy organization dedicated to quality affordable health care for all.  Since 1997, Community Catalyst has been working to build the consumer and community leadership required to transform the American health system.  With the belief that this transformation will happen when consumers are fully engaged and have an organized voice, Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone-especially vulnerable members of society.  For more information, visit www.communitycatalyst.org.

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