Texans get nearly $167 million in health insurance rebates

Louis and Katy Fernandez and their daughter Sarah each received rebates for their individual health insurance policies. Louis and Katy Fernandez and their daughter Sarah each received rebates for their individual health insurance policies. Photo: Melissa Phillip Photo: Melissa Phillip Image 1 of / 1 Caption Close Texans get nearly $167 million in health insurance rebates 1 / 1 Back to Gallery

Getting $795 in the mail is normally a good thing, but Katy Fernandez saw it as evidence of something she had long suspected.

"We were being overcharged."

Fernandez, her husband, Louis, and their daughter Sarah each received rebates for their individual health insurance policies last month, three of the 1.5 million Texans to benefit from a provision of the Affordable Care Act that requires insurance companies to return a portion of the premiums if they spend less than 80 percent on medical care.

Texans received $166.9 million in rebates, more than residents of any other state. Most of that - $134.2 million - went to people who, like the Fernandez family, bought individual policies.

The deadline for paying the rebates was Aug. 1.

The average rebate per Texas family was $187, according to the Department of Health and Human Services. Average rebates in other states ranged from $5 in North Dakota to $622 in Alaska.

Supporters of the health reform law, approved by Congress in 2010 and upheld by the Supreme Court earlier this summer, say the rebates show the law is working.

"It's holding insurance companies accountable," said Ethan Rome, executive director of the advocacy group Health Care for America Now. "It's insisting they spend more on health care than on executives' compensation."

He suggested the large number of Texans qualifying for rebates is a result of loose regulations.

"Texas is the Wild West," Rome said. "Insurers have been free to run roughshod over consumers with virtually no regulation whatsoever, and thanks to Obamacare those days are over."

In response, John Greeley, a spokesman for the Texas Department of Insurance, said his agency is responsible for regulating small group and individual policies, reviewing rate filings for actuarial soundness and investigating rate increases in response to consumer complaints.

Discounts possible

The law, known as the Medical Loss Ratio standard, affected 12.8 million people nationally.

In Texas, most of those affected were individual policyholders, but about 10 million of the total nationally were insured through their jobs, so they won't necessarily see the money. Employers might use the money to benefit employees through steps such as offering discounts on future premiums.

That doesn't mean insurance companies will be lowering premiums.

"Medical Loss Ratio costs can vary from year to year and state to state, and a very few large claims can make a big difference," said Ellen Laden, a spokeswoman for UnitedHealthcare's Golden Rule Insurance Company, which paid rebates of $9.3 million to individual policyholders in Texas.

Laden said that was an average of $119 per policyholder.

Just because claims in 2011 didn't account for at least 80 percent of premiums doesn't mean they won't in future years, she said.

"But any year we don't reach the MLR threshhold, our customers can expect to receive a rebate," she said.

Blue Cross Blue Shield of Texas, through its Health Care Service Corp., paid $89.8 million to individual policyholders in Texas, according to a preliminary analysis provided by Health Care for America Now.

Blue Cross Blue Shield of Texas noted that, with 4.8 million members, it is the largest health insurer in the state. It said about 8 percent of its customers received rebates, ranging from $5 to "possibly a few hundred dollars."

Eager for 2014's arrival

Katy and Louis Fernandez were among them.

They are self-employed - she has a building design business, while he represents cabinet makers - and each has an individual policy with Blue Cross. Sarah Fernandez, 22, a student at Lamar University, is covered by a policy with Assurant Health Insurance.

Together, they pay $8,662 a year in premiums. Louis Fernandez's policy has a $5,000 deductible, Katy's has a $1,750 deductible, and Sarah's has a $1,000 deductible.

Katy's policy earned a $353 rebate; her husband's rebate was $373, and her daughter's was $70.

Now she's looking forward to 2014, when the law will end lifetime caps on coverage and restrictions on pre-existing conditions.

That may allow her to find a policy to cover her husband and herself, maybe even one with a lower deductible.

"Right now," she said, "I just hope he doesn't get sick."

jeannie.kever@chron.com