WASHINGTON – Today, the U.S. Health and Human Services Secretary Sylvia M. Burwell announced that consumers have saved a total of $9 billion on their health insurance premiums since 2011 because of the Affordable Care Act. In Connecticut, 69,186 consumers will benefit from $3,019,862 in refunds from insurance companies this summer, averaging $72 per family, because of the Affordable Care Act.

Created through the law, the 80/20 rule, also known as the Medical Loss Ratio (MLR) rule, requires insurers to spend at least 80 percent of premium dollars on patient care and quality improvement activities. If insurers spend an excessive amount on profits and red tape, they owe a refund back to consumers.

“Today’s report is another piece of evidence that the Affordable Care Act is working. Before the Affordable Care Act became law, insurance companies profited off of customers who paid too much for their health insurance premiums. But now, thanks to the Medical Loss Ratio provision of the Affordable Care Act, insurance companies must now return those excessive premium dollars to the consumer. As a result, more insurance companies are prioritizing patient care over profits”, said U.S. Senator Chris Murphy (D-Conn.) “This provision is instrumental to the entire goal of the Affordable Care Act, which is to ensure that access to affordable, quality health care is a right afforded to all Americans. Despite ceaseless Republican attempts to dismantle the law, the law is working well for millions of Americans and the people of Connecticut, and I’m proud to support it.”

“The 80/20 rule is bringing transparency and competition to the insurance market, ensuring that consumers are continuing to receive value for their premium dollars,” said Secretary Burwell. “Standards like these created under the health care law are providing Connecticut residents with immediate savings and are helping to keep costs down over the long-term.”

An HHS report released today shows that last year alone, consumers nationwide saved $3.8 billion up front on their premiums as insurance companies operated more efficiently. Additionally, consumers nationwide will save $330 million in refunds, with 6.8 million consumers due to receive an average refund benefit of $80 per family. This standard and other Affordable Care Act standards contributed to consumers saving approximately $4.1 billion on premiums in 2013, for a total of $9 billion in savings since the MLR program’s inception.

The report shows that since the rule took effect, more insurers year over year are meeting the 80/20 standard by spending more of the premium dollars they collect on patient care and quality, and not red tape and bonuses.

If an insurer did not spend enough premium dollars on patient care and quality improvement, they must pay refunds to consumers in one of the following ways:

• a refund check in the mail;
• a lump-sum reimbursement to the same account that was used to pay the premium;
• a reduction in their future premiums; or
• if the consumer bought insurance through their employer, their employer must provide one of the above options, or apply the refund in another manner that benefits its employees, such as more generous benefits.

The 80/20 rule, along with other standards such as the required review of proposed premium increases, is one of many reforms created under the health law helping to slow premium growth and moderate premium rates. Combined with the savings consumers are receiving from tax credits on the Marketplace and the new market reforms, including the prohibition of pre-existing condition exclusions and charging women more for insurance than men, the 80/20 rule helps ensure every American has access to quality, affordable health insurance.

To access the report released today, visit: http://www.cms.gov/cciio/Resources/Forms-Reports-and-Other-Resources/index.html#Medical Loss Ratio 

For more information on MLR, visit: http://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/Medical-Loss-Ratio.html