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Health ins. firms to spend more on care

Secretary of Health and Human Services Kathleen Sebelius prepares to testify before the Senate Appropriations Labor, HHS, Education and Related Agencies Subcommittee hearing about defending against public health threats on Capitol Hill in Washington on September 29, 2010. UPI/Roger L. Wollenberg
Secretary of Health and Human Services Kathleen Sebelius prepares to testify before the Senate Appropriations Labor, HHS, Education and Related Agencies Subcommittee hearing about defending against public health threats on Capitol Hill in Washington on September 29, 2010. UPI/Roger L. Wollenberg | License Photo

WASHINGTON, Nov. 23 (UPI) -- New U.S. regulations require health insurance companies to spend 80 percent to 85 percent of premiums directly for patients and not overhead, officials said.

Health and Human Services Secretary Kathleen Sebelius says the regulation, known as the "medical loss ratio" provision of the Affordable Care Act, said healthcare reform requires insurance companies publicly report how they spend premium dollars beginning in 2011.

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"These new rules are an important step to hold insurance companies accountable and increase value for consumers," Sebelius said in a statement.

Many insurance companies spend a big chunk of consumers' premium dollars on administrative costs such as executive salaries, overhead and marketing as well as profits, Sebelius said.

Consumers will receive more value for their premium dollar because insurance companies will be required to spend 80 percent to 85 percent of premium dollars on actual medical care and healthcare quality improvement, not administrative costs, Sebelius said.

Insurance companies that do not comply will be required to provide a rebate to their customers beginning in 2012, Sebelius said.

Health officials estimate up to 9 million Americans could be eligible for rebates starting in 2012 worth up to $1.4 billion -- with an average rebate per person of about $164 in the individual market, Sebelius added.

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