Obama To Insurers: Spend It On Medical Care, Or Else

The regulation unveiled by the Health and Human Services Department calls for insurance companies to spend at least 80 cents of the premium dollar on medical care and quality. For employer plans covering more than 50 people, the requirement is 85 cents. Insurers that fall short of the mark will have to issue their customers a rebate.

Part of the new health care law, the rule is meant to give consumers a better deal. Administration officials said it will prevent insurers from wasting valuable premiums on administration, marketing, and executive bonuses. “While some level of administrative cost is certainly necessary, we believe that they have gotten out of hand,’’ said Kathleen Sebelius, secretary of Health and Human Services.