The Medical Loss Ratio (MLR) provision of the Affordable CareAct is "working the way we hoped it would," Sen. John D.Rockefeller IV, D-W. Va., said today at a contentious Senatehearing during which Republicans challenged aspects of the law.

"The minimum medical loss ratio is a very simple idea, but itappears to have had a powerful, and very positive, effect on thehealth insurance market," Rockefeller said at the hearing of theCommerce, Science & Transportation Committee he chairs.

"I understand that there are people in this country–maybe evenhere in this room–who find it hard to concede that anything goodhas or will come from the Affordable Care Act," Rockefeller said."But I think it's pretty clear at this point that this piece of thelaw is."

The hearing featured an unusually sharp exchange at the endbetween Rockefeller and Sen. Ron Johnson, R-Wis. In his closingcomments, Rockefeller contended some of the opposition to"Obamacare" was because of racism. Johnson took umbrage at thatcomment, saying it was offensive, and cited a litany of complaintsabout the law. Foremost, he said, it interfered with the freemarket, one which was able to save his child, who was born with amajor heart defect.

He also said his constituents sent more than 150 complaintsabout higher premiums and deductibles for each comment aboutpositive aspects of the law.

The MLR provision in the healthcare reform law requiresindividual and small-group insurance plans to commit 80% ofpremiums to healthcare, while large-group plans mustachieve an 85% MLR.

The ACA also requires that each insurer must publicly discloseits MLR data, including premium income and expenditures on medicalclaims, broken down by individual, small-group, and large-groupmarkets, as well as by individual states.

Sen. John Thune, R-S.D., ranking minority member of thecommittee, acknowledged that some consumers in his state havebenefitted from the rebates provided by the law, but noted thatthose rebates come at a price.

According to Rockefeller, consumers and businesses have received$1.6 billion in rebate checks from their health-insurance companiesbecause the insurers' coverage fell below the 80% and 85% MLRthresholds. This figure does not include 2013 rebates, which willbe announced later in 2014, Rockefeller said.

But Thune contended that while the intent of the MLR is to helpcontain spending on health insurance, "which is a laudable goal,"some experts believe that the MLR could actually raise the cost ofpremiums and narrow the competition in the marketplace.

Moreover, he said, he is "very concerned" that the MLRregulation put forth by Department of Health and Human Services"can undermine efforts by insurers to prevent fraud and abuse,including efforts to prevent the delivery of inappropriate orunnecessary services that may harm consumers."  

Citing a report he ordered the committee staff to produce,Rockefeller said besides the rebates, millions more consumers havebenefited from the changes health insurers have been making toavoid paying rebates.

For example, he said, reports issued by the non-partisanCommonwealth Fund have found that, in the first two years of theMLR requirements, insurers reduced overhead by a total of $1.75billion–changes that ultimately reduce the cost of insurance toconsumers and the government.

Moreover, Rockefeller said, the report found that prior toenactment of the healthcare law, health insurers could offersimilar health plans in different states but with vastly differentMLRs, and companies could make greater profits from plans offeredin states that had limited or no MLR requirements.

"The ACA's new national minimum MLR requirements incentivizehealth insurers to provide policyholders appropriate value fortheir premium dollars–no matter what the consumer's state ofresidence," Rockefeller said.

He also said the new law required disclosure of more data byhealthcare providers regarding insurance-plan performance.

"This is now helping academics, health-policy experts, financialanalysts, and others understand how the market is working and whereimprovements are most necessary," Rockefeller said.

Thune countered that because the standards for the MLR programare left up to HHS, the provision effectively leaves the design ofhealthcare activities up to the government, rather than leaving thedecision and choice to the consumer and state-insuranceregulators. 

In a theme also used by other Republican members of thecommittee, Thune said even if people are saving money onhealth-insurance premiums through the MLR, estimates from thenonpartisan Joint Committee on Taxation and the CongressionalBudget Office project that tax increases from Obamacare areestimated to total $1 trillion over 10 years.

"Some of those costs will be passed on directly to consumers,including my constituents in South Dakota and many otherAmericans," he said.

Former Cigna executive and whistleblower Wendell Potter, who nowworks at the Center for Public Integrity, testified at the hearingthat the "greatest benefit" of the MLR has been for individuals andfamilies who are not able to get coverage through an employer.

He said according to the Kaiser Family Foundation, the averageMLR in the individual market increased from 78% in 2010 to 83% in2012.

"Researchers at the Foundation estimated that had it not beenfor the MLR requirements in the ACA, premiums in the individualmarket would have been $856 million higher in 2011 and $1.9 billionhigher in 2012," Potter said.

Another benefit of the MLR is that insurers are now operatingmore cost–efficiently to stay in compliance with the law, and, as aresult, many policyholders are paying lower premiums than theywould have been charged otherwise, he said.