SANTA BARBARA, CA – Today, Congresswoman Lois Capps (D-Calif) applauded the Department of Health and Human Services’ announcement of new consumer protections issued under the Affordable Care Act to ensure that health insurance premiums are spent on medical care.

Under the Affordable Care Act, health insurance companies will now be required to spend 80 to 85 cents of every premium dollar on direct medical care. Only 15 to 20 cents will be allowed to be spent on administrative costs and profits. The new Medical Loss Ratio requirements will go into effect on January 1, 2011. Health insurance companies that do not spend the minimum on direct medical care will be required to reimburse patients beginning in January of 2012.

Today, in the individual insurance market, twenty percent of consumers are enrolled in plans that spend more than 30 cents of every premium dollar on administrative costs and profits. An additional twenty five percent of consumers are enrolled in plans that spend between 25 cents and 30 cents on administrative costs and profits.

“This is a tremendous step forward for consumers and an example of how health care reform is benefiting all of us with insurance. This will hold insurance companies accountable for how they spend your premium dollars, and if they spend too much on lavish salaries for their CEOs, you’re going to get your money back,” said Capps.

To learn more, visit www.healthcare.gov

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