80/20 Rule

How the Health Care Law is Making a Difference for Nevadans

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Because of the Affordable Care Act, the 78% of Nevadans who have insurance have more choices and stronger coverage than ever before. And for the 22% of Nevadans who don’t have insurance, or Nevada families and small businesses who buy their coverage but aren’t happy with it, a new day is just around the corner.

Soon, the new online Health Insurance Marketplace will provide families and small businesses who currently don’t have insurance, or are looking for a better deal, a new way to find health coverage that fits their needs and their budgets.

Open enrollment in the Marketplace starts Oct 1, with coverage starting as soon as Jan 1, 2014.  But Nevada families and small business can visit HealthCare.gov right now to find the information they need prepare for open enrollment.

Key Features of the health care law are already providing better options, better value, better health and a stronger Medicare program for the people of Nevada:

Key Features

Coverage

Costs

Care

Better Options

The Health Insurance Marketplace

Beginning Oct 1, the Health Insurance Marketplace will make it easy for Nevadans to compare qualified health plans, get answers to questions, find out if they are eligible for lower costs for private insurance or health programs like Medicaid and the Children’s Health Insurance Program (CHIP), and enroll in health coverage.

By the Numbers: Uninsured Nevadans who are eligible for coverage through the Marketplace. 

  • 473,971 (22%) are uninsured and eligible
  • 347,244 (73%) have a full-time worker in the family
  • 174,840 (37%) are 18-35 years old
  • 218,730 (46%) are White
  • 44,217 (9%) are African American
  • 157,518 (33%) are Latino/Hispanic
  • 33,012 (7%) are Asian American or Pacific Islander
  • 258,036 (54%) are male

438,826 (93%) of Nevada’s uninsured and eligible population may qualify for lower costs on coverage in the Marketplace, including through Medicaid.

Nevada has received $74,754,285 in grants for research, planning, information technology development, and implementation of its Health Insurance Marketplace.

New coverage options for young adults

Under the health care law, if your plan covers children, you can now add or keep your children on your health insurance policy until they turn 26 years old. Thanks to this provision, over 3 million young people who would otherwise have been uninsured have gained coverage nationwide, including 33,000 young adults in Nevada.

Ending discrimination for pre-existing conditions  

As many as 1,157,045 non-elderly Nevadans have some type of pre-existing health condition, including 162,452 children.  Today, insurers can no longer deny coverage to children because of a pre-existing condition, like asthma or diabetes, under the health care law. And beginning in 2014, health insurers will no longer be able to charge more or deny coverage to anyone because of a pre-existing condition.  The health care law also established a temporary health insurance program for individuals who were denied health insurance coverage because of a pre-existing condition.  1,373 Nevadans with pre-existing conditions have gained coverage through the Pre-Existing Condition Insurance Plan since the program began.

Better Value

Providing better value for your premium dollar through the 80/20 Rule

Health insurance companies now have to spend at least 80 cents of your premium dollar on health care or improvements to care, or provide you a refund.  This means that 88,491 Nevada residents with private insurance coverage will benefit from $3,977,544 in refunds from insurance companies this year, for an average refund of $75 per family covered by a policy.

Scrutinizing unreasonable premium increases 

In every State and for the first time under Federal law, insurance companies are required to publicly justify their actions if they want to raise rates by 10 percent or more. Nevada has received $4,959,972 under the new law to help fight unreasonable premium increases.

Removing lifetime limits on health benefits 

The law bans insurance companies from imposing lifetime dollar limits on health benefits – freeing cancer patients and individuals suffering from other chronic diseases from having to worry about going without treatment because of their lifetime limits. Already, 937,000 people in Nevada, including 329,000 women and 269,000 children, are free from worrying about lifetime limits on coverage. The law also restricts the use of annual limits and bans them completely in 2014.

Better Health

Covering preventive services with no deductible or co-pay

The health care law requires many insurance plans to provide coverage without cost sharing to enrollees for a variety of preventive health services, such as colonoscopy screening for colon cancer, Pap smears and mammograms for women, well-child visits, and flu shots for all children and adults.

In 2011 and 2012, 71 million Americans with private health insurance gained preventive service coverage with no cost-sharing, including 615,000 in Nevada. And for policies renewing on or after August 1, 2012, women can now get coverage without cost-sharing of even more preventive services they need.  Approximately 47 million women, including 391,181 in Nevada will now have guaranteed access to additional preventive services without cost-sharing.

Increasing support for community health centers

The health care law increases the funding available to community health centers nationwide. In Nevada, 2 health centers operate 30 sites, providing preventive and primary health care services to 57,987 people.  Health Center grantees in Nevada have received $8,264,743 under the health care law to support ongoing health center operations and to establish new health center sites, expand services, and/or support major capital improvement projects.

Community Health Centers in all 50 states have also received a total of $150 million in federal grants to help enroll uninsured Americans in the Health Insurance Marketplace, including $451,674 awarded to Nevada health centers.   With these funds, Nevada health centers expect to hire 9 additional workers, who will assist 10,600 Nevadans with enrollment into affordable health insurance coverage.

Investing in the primary care workforce

As a result of historic investments through the health care law and the Recovery Act, the numbers of clinicians in the National Health Service Corps are at all-time highs with nearly 10,000 Corps clinicians providing care to more than 10.4 million people who live in rural, urban, and frontier communities.  The National Health Service Corps repays educational loans and provides scholarships to primary care physicians, dentists, nurse practitioners, physician assistants, behavioral health providers, and other primary care providers who practice in areas of the country that have too few health care professionals to serve the people who live there.  As of September 30, 2012, there were 36 Corps clinicians providing primary care services in Nevada, compared to 12 in 2008.

Preventing illness and promoting health

As of March 2012, Nevada had received $7,500,000 in grants from the Prevention and Public Health Fund created by the health care law. This new fund was created to support effective policies in Nevada, its communities, and nationwide so that all Americans can lead longer, more productive lives.

A Stronger Medicare Program

Making prescription drugs affordable for seniors 

In Nevada, people with Medicare saved nearly $41 million on prescription drugs because of the Affordable Care Act.  In 2012 alone, 22,122 individuals in Nevada saved over $14 million, or an average of $611 per beneficiary.  In 2012, people with Medicare in the “donut hole” received a 50 percent discount on covered brand name drugs and 14 percent discount on generic drugs.  And thanks to the health care law, coverage for both brand name and generic drugs will continue to increase over time until the coverage gap is closed.  Nationally, over 6.6 million people with Medicare have saved over $7 billion on drugs since the law’s enactment.

Covering preventive services with no deductible or co-pay

With no deductibles or co-pays, cost is no longer a barrier for seniors and people with disabilities who want to stay healthy by detecting and treating health problems early. In 2012 alone, an estimated 34.1 million people benefited from Medicare’s coverage of preventive services with no cost-sharing.  In Nevada, 166,815 individuals with traditional Medicare used one or more free preventive service in 2012.

Protecting Medicare’s solvency

The health care law extends the life of the Medicare Trust Fund by ten years.  From 2010 to 2012, Medicare spending per beneficiary grew at 1.7 percent annually, substantially more slowly than the per capita rate of growth in the economy.  And the health care law helps stop fraud with tougher screening procedures, stronger penalties, and new technology. Over the last four years, the administration’s fraud enforcement efforts have recovered $14.9 billion from fraudsters.  For every dollar spent on health care-related fraud and abuse activities in the last three years the administration has returned $7.90.

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Consumers Saved $3.9B on Premiums in 2012

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Health care law will provide families an average of $100 back in premium rebates

Today, the Department of Health and Human Services (HHS) announces that nationwide, 77.8 million consumers saved $3.4 billion up front on their premiums as insurance companies operated more efficiently.  Additionally, consumers nationwide will save $500 million in rebates, with 8.5 million enrollees due to receive an average rebate of around $100 per family.

Today’s report includes the 2012 health insurer data required under the Affordable Care Act’s Medical Loss Ratio, or “80/20 rule.”  The report shows that, compared to 2011, more insurers are meeting this standard and spending more of their premium dollars directly toward patient care and quality, and not red tape and bonuses.

Created through the Affordable Care Act, the rule requires insurers to spend at least 80 cents of every premium dollar on patient care and quality improvement.  If they spend a higher amount on other expenses like profits and red tape, they owe rebates back to consumers.  For many consumers, the report found that the law motivated their plans to lower prices or improve their coverage to meet the standard.  This new standard and other Affordable Care Act policies contributed to consumers saving approximately $3.9 billion on premiums in 2012, for a total of $5 billion in savings since the program’s inception.

“The health care law is providing consumers value for their premium dollars and ensuring the money they pay every month to insurance companies goes toward patient care,” HHS Secretary Kathleen Sebelius said.  “Thanks to the law, 8.5 million Americans will receive $500 million back in their pockets and purses.”

If an insurer did not spend enough premium dollars on patient care and quality improvement, rebates will be paid in one of the following ways:

  • a rebate check in the mail;
  • a lump-sum reimbursement to the same account that they used to pay the premium if by credit card or debit card;
  • a reduction in their future premiums; or
  • their employer providing one of the above, or applying the rebate in another manner that benefits its employees, such as more generous benefits.

Insurance companies that do not meet the standard will send consumers a notice informing them of this new rule.  The notice will also let consumers know how much the insurer did or did not spend on patient care or quality improvement, and how much of that difference will be returned as a rebate.

The 80/20 rule, along with the required review of proposed double-digit premium increases, works to stabilize and moderate premium rates.  And, with the new market reforms, including the guaranteed availability protections and prohibition of the use of factors such as health status, medical history, gender and industry of employment to set premiums rates, this policy 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.healthcare.gov/news/factsheets/2010/11/medical-loss-ratio.html

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Holding Insurance Companies Accountable for High Premium Increases

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— by Kathleen Sebelius, Secretary of Health and Human Services

The Affordable Care Act (ACA) prohibits some of the worst insurance industry practices that have kept affordable health coverage out of reach for millions of Americans.  It provides families and individuals with new protections against discriminatory rates due to pre-existing conditions, holds insurance companies accountable for how they spend your premium dollars, and prevents insurance companies from raising your insurance premium rates without accountability or transparency.

For more than a decade before the ACA health insurance premiums had risen rapidly, straining the pocketbooks of American families and businesses.  Oftentimes, insurance companies were able to raise rates without explanation to consumers or public justification of their actions.

One of the provisions of the ACA is that insurance companies must now reveal the percentage of premium dollars they actually spend on health care and how much they spend on administration (e.g., salaries and marketing. Prior to ACA, this type of information was a closely held secret and insurance companies pocketed a good percentage of your premium dollars. With ACA in place, that’s no longer the case. If an insurance company spends less than 80% of premiums on medical care and quality (or less than 85% in the large employer, large group market), it must rebate the portion of premium dollars that exceeded this limit. This 80/20 rule is commonly known as the Medical Loss Ratio (MLR) rule

Chart showing the percent of rate filings that requested increases of 10 percent or more. 2009: 72%, 2010: 75%, 2011: 51%, 2012: 34%, 2013: 14% Rate Review in Action
The ACA brought an unprecedented level of scrutiny and transparency to health insurance rate increases by requiring insurance companies in every state to publicly justify their actions if they want to raise rates by 10% or more.  Insurance companies are required to provide easy to understand information to their customers about their reasons for significant rate increases, and any unreasonable rate increases are posted online.

And it’s working.  A new report released today shows that the health care law is helping to moderate premium hikes.  Since this rule was implemented, the number of requests for insurance premium increases of 10% or more has dropped dramatically, from 75% to 14%.  The average premium increase for all rates in 2012 was 30% below what it was in 2010. And available data suggest that this slowdown in rate increases has continued into 2013.

Moreover, when an insurer does decide to increase rates, consumers are seeing lower rate increases than what the insurers initially requested.  In the review of rate requests for 10% or more, over 50% resulted in customers receiving either a lower rate increase than requested or no increase at all.

States have received $250 million in Health Insurance Rate Review Grants to help strengthen and improve their rate review processes thanks to the Affordable Care Act.  Of the 44 states that received rate review grants, 40 have reported enhancements to their rate review websites.  These website enhancements include searchable rate filings, new public comment options, live streaming of rate hearings, and plain language explanations of rate review and rate filings.

The Effective Rate Review program is one of many in the health care law aimed at protecting consumers.  The rate review program works in conjunction with the 80/20 rule, which requires insurance companies to generally spend 80% of premiums on health care or provide rebates to their customers. Insurance companies that did not meet the 80/20 rule have provided nearly 13 million Americans with more than $1.1 billion in rebates. Americans receiving the rebate will benefit from an average rebate of $151 per household.

Additionally, today we issued a final rule that implements five key consumer protections from the Affordable Care Act, including protection against denial of health coverage because of a pre-existing condition.  This rule makes the health insurance market work better for individuals, families and small businesses, and it also increases the transparency brought to rate increases by directing insurance companies in every state to file all of their rate increase requests.

For more information about the Affordable Care Act, visit http://www.healthcare.gov/index.html.

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