President Barack Obama presented a glowing but incomplete view of how much Americans can save on premiums thanks to the Affordable Care Act.
In a July 18 speech, he said 8.5 million Americans would receive rebates “averaging around 100 bucks each.” But much of the money goes to companies offering insurance to their employees, not directly to individuals. Plus, the $100 average is per family, not per person. Obama also held up New York as an example of how premiums on insurance exchanges could be significantly lower than they are now on the individual market. But he didn’t mention that New York’s insurance regulations make it a special case.
Obama made his comments at the White House, standing in front of Americans who had received rebates because of the Affordable Care Act’s requirement that insurance companies spend at least 80 percent of premium dollars on health care, as opposed to marketing, administration or profits. If insurers don’t do that — it’s called a medical loss ratio, or the 80/20 rule — they have to refund part of the premiums to consumers. (Large group plans have to spend at least 85 percent of premiums on health costs.) The estimated total in rebates this year is about $500 million, according to the Centers for Medicare and Medicaid Services.
Obama, July 18: Last year, millions of Americans opened letters from their insurance companies — but instead of the usual dread that comes from getting a bill — (laughter) — they were pleasantly surprised with a check. In 2012, 13 million rebates went out, in all 50 states. Another 8.5 (million) rebates are being sent out this summer, averaging around 100 bucks each.
Obama is a bit off on the facts. The average rebate is about $100 per family — not per person. It’s not 8.5 million rebates “averaging around 100 bucks each,” as the president said. Instead, it’s 8.5 million consumers who will benefit, with an average rebate of $100 per family.