Obamacare Rebates Not a Good Sign, Experts Say

Thursday, 20 Sep 2012 12:04 PM

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Millions of Americans may be getting rebates from their insurance companies but that’s not necessarily an encouraging sign, according to National Public Radio.

Nearly 13 million Americans are receiving rebates from their health insurance companies under an Obamacare provision that is “supposed to force insurance companies to run better,” according to NPR.

But the rule could make health insurance more expensive.

"A lot of insurance companies run fairly high overhead rates," Kathleen Sebelius, the secretary of Health and Human Services, told NPR. "And those overhead rates, which go to everything from CEO salaries, to marketing, to agent and broker fees . . . don't really add to anybody's health benefit."

The provision says that if more than 20 percent of the premiums insurance companies collect goes to overhead and profit, they have to give out refunds.

Jonathan Gruber, an economist at MIT, who helped craft Obamacare, told NPR that the rule has the potential to drive up the cost of healthcare.
Since 80 percent of premiums have to be spent on healthcare, insurance companies have less incentive to keep health care costs down, according to NPR.

"I worry there that there's an incentive in that direction," Gruber told NPR. "I absolutely do."


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