Health insurers will pay $1 billion in rebates this year: analysis


Health insurers will issue $1 billion worth of rebates to consumers this year, according to an analysis from the Kaiser Family Foundation.

The rebates stem from a requirement in the Affordable Care Act (ACA) that health insurers spend at least 80 percent of the money they take in on medical care, as opposed to profits or administrative expenses. If an insurer does not meet that threshold, they have to pay back money to consumers in the form of rebates.

The analysis estimates that 8.2 million people will be receiving rebates, with an average amount received per person of $128.

Most of the rebates will be paid to people who buy health insurance on their own, including through the ACA marketplaces, as opposed to getting coverage from an employer.

“$1 Billion dollars: That’s enough to buy a baseball team, superyacht, or private island,” tweeted Cynthia Cox, one of the authors of the analysis at the Kaiser Family Foundation. “It’s also how much health insurers expect to send out as rebates to individuals and businesses because of the Affordable Care Act.”

The amount of rebates is larger than in some previous years, though down from record amounts in 2020 and 2021.

In 2020 in particular, health insurers ended the year with lower than expected spending because many elective procedures were canceled during the pandemic.

Rebates will be issued by the end of September, and could either come in the form of a check, or in a credit off of an enrollee’s premiums.

Insurers in the process of setting their premiums for 2023 face a difficult task, the analysis states.

“Insurers setting premiums for the 2023 plan year will need to factor in several pandemic-related considerations, including but not limited to: potential pent-up demand for care, the negative impact of foregone care on the health of some enrollees, the rate of future COVID-19 hospitalizations, and the need for more booster shots,” it states.

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