Some insurers overestimate costs to reduce member rebates, study shows

A new study shows health insurance companies overestimate patient care costs to reduce or avoid paying refunds to policyholders, according to the American Accounting Association.

The ACA requires insurers to spend at least 80 percent of premium revenue on benefits for members. If they don't meet that requirement, they must refund the difference to those policyholders.

Through the examination of medical loss ratio reports, researchers found that insurers' reported estimates were consistently overstated when accurate estimates would have allowed for higher refunds, according to a press release.

Study co-author Evan Eastman said, "We estimate that about 14 percent of insurers engage in strategic overestimation, costing policyholders hundreds of millions of dollars in unpaid rebates."

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