Today, in a speech on the senate floor, U.S. Sen. Al Franken marked the August 1 deadline for health insurance companies to send almost 13 million Americans - including 123,000 Minnesotans - rebates as a result of a provision he championed in the health reform law.

The provision-called medical loss ratio (MLR) or the "80/20 rule" - requires health insurers to spend at least 80 to 85 percent of what they collect in premiums on actual health services for their customers, as opposed to administrative costs, profits, marketing, or CEO salaries. Insurance companies that failed to meet that threshold had to issue rebates by August 1, which this year will total $1.1 billion.

"Over the past few weeks, hundreds of thousands of Minnesotans have received letters or postcards in the mail from their health care insurers. These notices are letting people know whether or not their insurer met a new rule in the health care law-a rule that I championed, called the medical loss ratio, or the 80/20 rule," said Sen. Franken in his speech.

"...And when those notices say that the insurer failed to meet the medical loss ratio, Americans are also getting something else in the mail-a check. Or lower premiums for the next year. Because under my medical loss ratio provision, insurers who do not spend at least 80 or 85 percent of premiums on actual health care services for their beneficiaries have to rebate that money to their consumers."

The full text of Sen. Franken's speech is below.

Sen. Franken authored the MLR provision during the debate on health care reform. It was inspired by Minnesota's long-standing medical loss ratio law and the state's non-profit health insurers, which lead the nation in keeping administrative costs low. Under the MLR provision, large group health insurers are required to spend at least 85 percent of what they collect in premiums on actual health services. Small group and individual market insurers are required to spend at least 80 percent.

STATEMENT ON THE MEDICAL LOSS RATIO
Senator Al Franken

M. President, over the past few weeks, hundreds of thousands of Minnesotans have received letters or postcards in the mail from their health care insurers. These notices are letting people know whether or not their insurer met a new rule in the health care law-a rule that I championed, called the medical loss ratio, or the 80/20 rule.

This provision, which I based on a Minnesota state law, requires large group insurers to spend 85 percent of the premiums that they receive from their beneficiaries on actual health care services. Not marketing, or administrative costs, or CEO salaries-these dollars have to be spent on actual health care. And for insurers in the small group and individual markets, this threshold is 80 percent.

So this summer, across the country, Americans are getting notices from their insurers that they met-or did not meet-this 80 or 85 percent threshold. And when those notices say that the insurer failed to meet the medical loss ratio, Americans are also getting something else in the mail-a check. Or lower premiums for the next year. Because under my medical loss ratio provision, insurers who do not spend at least 80 or 85 percent of premiums on actual health care services for their beneficiaries have to rebate that money to their consumers.
August 1st was the deadline for insurers who didn't meet the MLR threshold to rebate the difference to their consumers. And because of the medical loss ratio, more than 123,000 Minnesotans got rebates from their insurer. Those rebates added up to an average of $160 dollars per household.

And this isn't unique to Minnesota-across the country, 12.8 million Americans got rebates from their insurers who overcharged them, and other insurers lowered premiums for last year to comply with the medical loss ratio-such as Aetna in Connecticut, which lowered premiums by an average of 10 percent last year because of the MLR.

Minnesota has a culture of high-quality, low-cost health care. In fact, the Agency for Healthcare Research and Quality recently announced that in 2011, Minnesota's health care quality was the highest in the nation. And the medical loss ratio, which was first passed as a Minnesota state law in 1993, is yet another example of Minnesota's leadership in bringing down health care costs while preserving quality.

Minnesota's unique health car culture includes the Mayo Clinic, co-operative models like HealthPartners, and visionary public health leadership from state legislators. Health care in our state is also distinguished by the fact that 90 percent of Minnesotans are served by a non-profit health plan. These plans outperform their national peers and are able to put 91 cents of every premium dollar toward actual health care services.

By taking large profits out of the health insurance industry, Minnesota health plans do a better job helping our residents to live healthier, longer lives. And the medical loss ratio is holding all health plans to the same standards we've set in Minnesota by requiring that 80 to 85 percent of premium dollars actually pay for health services.

Before this year, in other plans throughout the nation, less than 60 percent of your premiums were being put toward health care; the rest was being used for overhead, marketing, bonuses, and profits. In fact, one study of insurers in Texas a few years ago showed MLRs as low as 22 percent-meaning that of all the premiums that families were paying to their insurers, they were spending only 22 percent on actual health care services for them.

And that's why my medical loss ratio is so important-it squeezes fat out of the health insurance market and makes your premium dollars go further. For many families, it's actually lowering costs-delivering $1.1 billion in rebates and also lowering premiums. This was an incredibly important step, because we know premiums were going up way too fast, a lot faster than those families' income.
This is just one way that the health care law is already changing the culture of care in our country. One of the other things that the law did was to move toward rewarding quality of care, not quantity. Specifically, it directed Medicare to start paying doctors based on the value of the care they provide, not just the volume. This was a provision that I, Sen. Klobuchar, and several of our other colleagues championed, called the value index.

Because when Minnesota gets paid less for providing higher-quality care, everyone loses. Minnesota loses, because although our average Medicare beneficiary costs the federal government nearly 50 percent less than a beneficiary in Texas, we get punished for higher-quality care with lower reimbursements. Patients in Texas lose, because they're not getting the highest value for their health care dollar. And all taxpayers lose when Medicare pays for unnecessary or overpriced services in Texas and elsewhere.

It would be an understatement to say that the law has received some attention this year. And I know that there's a lot of uncertainty among our constituents about how the law will affect them. So let me take a moment to talk about just a few of the other things the law is already doing for the people of Minnesota.

Starting tomorrow, almost 900,000 women in Minnesota-and 47 million women around the country-will have free access to preventive health services, including gestational diabetes screenings, preventive health visits with their doctors, and FDA-approved contraceptives. Because of the health care law, women, not insurance companies, can now make decisions about their health care, and can access the services that will keep them healthy.

The health care law is also helping families in Minnesota and across the country by prohibiting insurers from denying health coverage for children based on a pre-existing condition. Parents around the country can now sleep a little bit easier knowing that if their child gets sick, they'll still be able to get the health care coverage they need.

Parents will also be relieved to know that young adults can now stay on their parents' health care plan until the age of 26. Because of this provision, 35,000 young adults in Minnesota are now insured on their parents' policy.

Seniors are also very happy with the changes that the health care law has made. When I visit senior centers in Minnesota, I hear relief from seniors who can now pay for their medications, thanks to the provision in the health care law. This provision has already allowed 57,000 seniors in Minnesota to receive a 50 percent discount on their covered brand name prescription drugs when they hit the so-called donut hole, at an average of $590 savings per person. And by 2020, the law will close the donut hole entirely. Seniors also get free preventive health services under the health care law, like mammograms and colonoscopies, as well as free annual wellness visits with their doctor.

I could go on and on. But the point is that because of the law, more people are getting care, the quality of our health care is better, and we're lowering costs. And I'm proud of that.

As we here in the Senate head home to spend August in our states, I urge my colleagues to listen as I do when constituents tell us about the rebates they received, and the kids who were able to stay on their parents' insurance, and the health screenings that saved the lives of grandparents. I hope they will listen to the stories of kids with pre-existing conditions who were finally able to get coverage, and seniors who were able to afford both their prescriptions and their dinner. I urge all my colleagues to acknowledge these benefits and to support the continued implementation of the Affordable Care Act.

Thank you, and I yield the floor.