By Sam Baker - 06/20/13 11:24 AM ET
Consumers saved nearly $4 billion on their insurance premiums last year because of new rules in President Obama's healthcare law, the administration said Thursday.
The Health and Human Services Department (HHS) said consumers saved $3.9 billion last year from new rules that govern insurance companies' spending. The rules have saved consumers roughly $5 billion over the past two years, HHS said.
HHS highlighted the savings Thursday as an immediate benefit of the Affordable Care Act and evidence that the law will help make insurance more affordable.
The Obama administration has consistently and aggressively promoted elements of the law that have had an immediate impact, as it tries to reverse negative public opinion and sell a skeptical public on the law as its major provisions are about to take effect.
“The healthcare 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 in a statement.
The health law requires insurance plans to spend 80 or 85 percent of their premiums on medical costs, leaving only the remaining 15 or 20 percent for profit and administrative expenses. They must pay a rebate if they miss the threshold.
Consumers saved money as insurers changed their premiums to comply with the requirement, HHS said in a report Thursday.
The new rules first took effect in 2011. That year, insurers paid out more than $1 billion in rebates. Last year saw fewer rebates and more up-front savings, according to the HHS report.
Consumers saved $3.4 billion last year as insurance companies lowered their premiums to comply with the new rules. Consumers also received $500 million in rebates from insurers that did not meet the new standards.
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