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New study: Jay helped cut health-care costs

CHARLESTON, W.Va. -- A new study by the Commonwealth Fund shows Sen. Jay Rockefeller, D-W.Va., succeeded in cutting health-care costs for thousands of West Virginians by limiting corporate profits and executive salaries.

Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation, wrote a provision included in the new federal Affordable Care Act to lower overhead costs that health insurance companies can charge consumers.

In 2011, that provision saved $13.9 million for 88,966 West Virginians. Statistics are not yet available for 2012.

On Thursday, Rockefeller said the new Commonwealth Fund "study makes very clear that a key consumer protection piece of the health reform law is showing real savings for tens of thousands of West Virginians.

"It's past time that insurance companies stop taking advantage of consumers and spend more of consumers' money on actual medical care. A few months ago, many West Virginians started receiving money back in the form of rebates because they had been overcharged under the new rules."

Earlier this month, the Commonwealth Fund (www.commonwealthfund.org) published an "issue brief" by Michael J. McCue and Mark A. Hall, titled, "Insurers' Reactions to Regulations of Medical Loss Ratios."

The Affordable Care Act, which took effect on Jan. 1, 2011, requires health insurance companies to limit their expenditures on administrative costs, including executive salaries and company profits.

The medical loss ratio, or MLR, is the percentage of insurance premiums that health insurance companies pay for medical care and health-care improvements, as opposed to the percentage of insurance premiums going to administrative expenses and profits.

The MLR must be at least 85 percent in the large-group insurance market and at least 80 percent in individual and small-group markets.

On Thursday, Rockefeller released a statement pointing out that his amendment "requires insurance companies to use at least 80 percent of the money consumers pay each month on premiums for actual medical care - instead of extravagant offices, excessive executive salaries and company profits."

Under the Affordable Care Act, insurance companies that spent less than 80 percent of the premiums they collect on health-care services are required to send rebates to consumers.

Rebates to consumers were given as reduced premiums on future insurance coverage or as refund checks.

In 2011, after the new law went into effect, insurance companies reduced their administrative costs in large-group markets by $785 million nationally -- which helped customers in those markets.

Small-group insurers sent $321 million in rebates to their customers, according to the Commonwealth Fund study, while consumers in individual policy markets received rebates of $394 million.

"This past fall, many West Virginians who were overcharged for their health insurance began receiving rebates totaling about $2.7 million statewide.

"This year alone, more than 16,000 West Virginians with private insurance coverage should receive rebates, averaging $374 per family," Rockefeller stated.

Reach Paul J. Nyden at pjnyden@wvgazette.com or 304-348-5164.


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