Health insurance rebates to total $62 million in Illinois

Chicago Health Care Daily reports:

“About 163,000 families in Illinois will receive health insurance rebates that average $380 as a result of the federal overhaul of health care, the Obama administration announced Thursday, days before the U.S. Supreme Court is expected to rule on the constitutionality of the landmark law.

Illinois families are receiving the fifth-highest rebate nationwide, well above the national average of $151 per family, according to a report released by the U.S. Department of Health and Human Services. The rebates result from the health care law’s requirement that insurers spend a set percentage of their premiums on patient care and health activities or refund the difference to customers.

The high court is expected to rule on challenges to the law next week. Depending on how the justices rule, the rebate provision may be voided.

The highest rebates here will be for customers in small group plans, which are typically small companies. The average rebate will be $551 per family.

While rebates in Illinois are higher than the national average, premiums here may not be higher than the rest of the nation, said Professor Mark Hall of the Seton Hall Law School in Newark, N.J.

Other insurers who don’t owe rebates may be charging lower premiums, offsetting the rates charged by the insurers who owe rebates, he noted in an e-mail.

“Perhaps (Illinois) does not have among the worst rates,” he said.

The rebates must be paid by Aug. 1 and can come in the form of a check or a reduction to a future premium payment. Illinois residents will receive a total of nearly $62 million, the fifth highest state total nationwide.

Tiny Vermont has the highest rebate, with an average of $807 per family. No rebates will be paid in Rhode Island and New Mexico, the data shows.

The rebates are another sign of how premiums in Illinois are too high because the state’s health insurance market is dominated by a handful of companies, said Jim Duffett, executive director of the Champaign-based Campaign for Better Health Care, a consumer group.

“Some might try to argue that competition would prevent this,” he said in an e-mail. “We have no competition.”

Nationwide, the Patient Protection and Affordable Care Act of 2010 will require rebates totaling $1.1 billion, the department said Thursday.

The law was intended to require insurers to spend a minimum amount of premium revenue on patient care and other health activities — 85 percent for large group plans and 80 percent for small group plans and individual insurance. If they don’t, the difference must be paid to policyholders.

The expected rebates in Illinois, broken down by the type of insurance:

—About 61,000 people in the individual market will receive a total of almost $8 million, an average of $199 per family.

—About 164,000 people in small group plans will receive $47.54 million, an average of $551 per family.

—About 74,000 people in large groups will receive $6.6 million, an average of $176 per family.

The figures are based on reports that health insurance companies filed with the federal government by June 1.