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Capps Applauds New Protections on Medical Care

Health insurance companies now will be required to spend 80 to 85 cents of every dollar on direct care

Rep. Lois Capps, D-Santa Barbara, on Monday applauded the Department of Health and Human Services’ announcement of new consumer protections issued under the Affordable Care Act to ensure that health insurance premiums are spent on medical care.

Under the Affordable Care Act, health insurance companies now will be required to spend 80 to 85 cents of every premium dollar on direct medical care. Only 15 to 20 cents will be allowed to be spent on administrative costs and profits. The new Medical Loss Ratio requirements will go into effect Jan. 1, 2011.

Health insurance companies that don’t spend the minimum on direct medical care will be required to reimburse patients beginning in January 2012.

Today, in the individual insurance market, 20 percent of consumers are enrolled in plans that spend more than 30 cents of every premium dollar on administrative costs and profits. An additional 25 percent of consumers are enrolled in plans that spend 25 cents to 30 cents on administrative costs and profits.

“This is a tremendous step forward for consumers and an example of how health-care reform is benefiting all of us with insurance,” Capps said. “This will hold insurance companies accountable for how they spend your premium dollars, and if they spend too much on lavish salaries for their CEOs, you’re going to get your money back.”

Click here for more information.

— Ashley Schapitl is press secretary for Rep. Lois Capps, D-Santa Barbara.


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