Under a federal determination released today, insurers in Texas will have to abide by spending rules set forth in President Obama’s signature health care reform package.
One of the provisions in the Affordable Care Act stipulates that insurers must spend 80% of customers’ premium dollars on medical care, and not overhead costs. Any overhead spending over 20%, and insurance companies would be required to issue rebates to their customers.
That said, states can apply for an adjustment of to increase the amount they spend on overhead. The Texas Department of Insurance applied to do just that, requesting to ramp up medical care spending more slowly: 71% for (current) reporting year 2011, 74% for 2012, and 77% for 2013.