Refunds that almost didn't happen

By today all health insurance companies were to have notified individual policy holders and small businesses about premium refunds or credits they were due thanks to Obamacare.  In my July 18^th blog I talked about these refunds and how they could finally demonstrate to the public that healthcare reform was working to make health insurance more affordable.

Obamacare required insurance companies to spend at least 80% of premiums on medical services.  The other 20% could go toward all forms of administration including advertising, profits, taxes and CEO salaries.  If the companies didn’t reach the 80% threshold, they had to give back the difference to the policy holders thus giving consumers more bang for the health insurance premium buck.

Over 105 thousand South Carolinians will get refunds totaling $15.3 million and scores of small businesses will get a total of $4.3 million. 

Nationally 12.8 million Americans will receive over $1.1 billion in health insurance refunds.

But South Carolinians almost didn’t see any refunds. 

Back on July 15, 2010, the South Carolina Department of Insurance (DOI) asked the U.S. Department of Health & Human Services (HSS) for a waiver from the 80/20 rule.  Without any public input (but plenty from insurance companies such as Blue Cross Blue Shield of South Carolina) our Commissioner of Insurance argued that requiring carriers to spend 80% of individual policy holders’ premium dollars on medical care would be too difficult for insurance companies to comply with.  As a result, he said, some of our smaller carriers serving South Carolina might leave the state thus reducing consumer choices.  Our DOI suggested that for South Carolina the rule should be 65/35 for 2011. 

Seven states actually did get a waiver on the 80/20 rule out of the 15 that tried.  On behalf of the South Carolina Small Business Chamber I sent a letter to HHS opposing our Department of Insurance request. 

Fortunately our state’s request for the waiver was not granted.  The dire consequences that our DOI warned might happen didn’t happen.  And the biggest hunk of the $19.6 million refunds to South Carolinians will most likely come from the state’s biggest insurance company that was whispering “waiver” in our insurance commissioner’s ear, Blue Cross Blue Shield.