Health Insurers Are Cutting Michigan Consumers A $89 Million Check

Health Care

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Nearly 340,000 Michigan consumers stand to receive $89 million in the form of a rebate or a future credit on their monthly insurance premiums, reports Detroit Free Press. The payout, to be doled out over three years, comes courtesy of Monday’s ruling by federal health regulators that Michigan would not be granted exemption from new health care reform.

Estimates for how much each consumer will receive remain in flux.

However, consumer advocates and lobbyists are split on whether the move to have insurers adopt the 80-20 rule—in which insurers spend at least 80 cents per dollar collected from monthly premiums and 20 cents max on administrative costs— bodes well for the state long-term.

Some, like Gary Cohen, a federal consumer oversight director in the U.S. Department of Health and Human services, applauded the ruling, saying it would free up important information for consumers.

Others, like Rep. Mike Rogers, blasted the ruling for pushing smaller insurers to flee the state for better markets and cut jobs at a time when the state needs them most.

The ruling could also push smaller insurers to jack up their prices and eliminate budget-friendly options for strapped consumers.

According to Crain’s Detroit Business reporter Jay Greene, eight insurers will be forced to repay their subscribers including Golden Rule Insurance Co, owned by United Healthcare; Time Insurance Co.; Aetna Inc.; Humana, Alliance Health Insurance; Priority Health; John Alden Life Insurance Co.; and MEGA Life and Health Insurance Co.

The 80-20 medical loss ratio rule, which went in effect on Jan. 1, has helped consumers save, says Gary Cohen, acting director of oversight with the centre for Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services.

And despite what Michigan Insurance Commissioner R. Kevin Clinton thinks, Michigan does have a “stable and healthy” insurance market, says Cohen.

Back in June, Clinton asked the government for a three-year phase in of the rule. Now Michigan has 10 days to appeal the federal decision.

Learn more about the ruling on Crain’s Detroit Business

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