Millions of employers and health insurance policyholders will collectively receive $1.3 billion in rebates this year, as part of President Obama’s healthcare reform law, a research group reported Thursday. As the constitutionality of ObamaCare remains under contention, the White House and Democrats in Congress are touting the rebate scheme as an indication that the law is giving back to American consumers.
The consumer dividends will average $127 per policyholder, and they stem from an ObamaCare provision requiring insurance providers to spend 80 percent of their collected premiums (for large employers, the requirement is 85 percent) on medical care and quality development or reimburse the difference to individuals and businesses. The stipulation was championed by Democrats and consumer advocacy groups who were worried that providers would spike premiums to inflate executive salaries, shareholder dividends, and other expenses unrelated to consumers’ medical care. Recipients of the rebates are described as follows:
• Almost one-third of consumers in the individual market will get rebates averaging $127. These are consumers who are not covered by an employer and purchase their policies directly from an insurance company.
• Nationwide, rebates to individual consumers will total $426 million.
• In the small-employer market, 146 insurance plans covering nearly 5 million workers and dependents will issue $377 million in refunds. Employers do not have to pass those on to workers. They also can opt for a discount on next year's premiums.
• In the large-employer market, 125 plans covering 7.5 million workers and dependents will issue $541 million in rebates.
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