Obamacare will provide $1.3 billion in rebates to consumers

The Affordable Care Act is doing what it was supposed to. You won't hear that from congressional Republicans or Mitt Romney (or, probably the Supreme Court), but the provisions that have already gone into effect are working. That includes people up to age 26 being covered by their parents' plans, free wellness exams for seniors, "doughnut hole" Medicare prescription drug savings, and insurers no longer being able deny coverage to children because of a pre-existing condition.

Here's another one. Beginning in 2011, health insurers were required to spend at least 80 percent of premiums (for small group plan, 85 percent for large groups) on actual medical care, and if they failed to meet that standard they had to pay a rebate of the difference. They'll have to make those rebate payments by August of this year.

The Kaiser Family Foundation just finished a survey of what happened in 2011 [pdf] with that rule, the "medical loss ratio," and found that insurers will be paying $1.3 billion in rebates for 2011 including "$426 million in the individual market, $377 million in the small group market, and $541 million in the large group market." About one-third of consumers in the individual market are going to see rebates, averaging at $127 per person. For the group plans, the purchaser of the plan (employer or other sponsoring group) will get the rebate, and 28 percent of the small group market and 19 percent of the large group market will get the rebates (which will be much smaller per person, about $14).

But what's really interesting about the study is that is suggests that the medical loss ratio rule actually means that insurance is doing what it's supposed to do: provide health care. As Sarah Kliff writes, experts expected that rebates, based on 2010 numbers, would have amounted to at least $2 billion. Which means that $700 million in premiums paid went where the Affordable Care Act said it was supposed to go: into providing health care coverage.