The absurdly mis-named Affordable Care Act requires that health plans pay out a certain percent of premium as medical care expenses and provide rebates if they are under that percent. The target is 85% for large groups, and 80% for small groups and individual plans. A recent analysis from Mark Farrah Associates provides a look at profitability and rebates in 2024. Because of lags in state insurance department filings by health plans, this is the most recent available data. In 2024, health plans paid $1.64 billion in rebates covering 8.6 million members. Alabama, Missouri and Louisiana had the highest percent of premiums returned as rebates. These are markets dominated by a single health plan, likely leading to excessive premiums. Individual plans tended to be responsible for the greatest proportion of rebates. In general what the data show is that insurers are making a lot of money by charging high premiums and often barely meeting the medical care cost percent target. (MFA Brief)
