The Affordable Care Act (ACA) instituted new regulations on health insurance plans. One of the biggest changes was that large health plans are now required to spend 85% of health insurance premiums on health care services and smaller and individual health plans are required to spend 80%. The remaining 15% – 20% of premium revenues can be used for administrative costs and profits. These so-called Medical Loss Ratio (MLR) rules require that plans return excess premium revenues as rebates to beneficiaries.
In a year like we just had, where consumption changed dramatically from what health insurance actuaries predicted, MLR rebates protect consumers. Health insurers are returning $2.1 billion in MLR rebates in 2021 because people used fewer health care services in 2020 than had been anticipated and priced into premiums.1
But dental insurance plans were exempt from ACA reforms and are not subject to these MLR rules. Some dental health plans have spent as little as 4% of premiums on actual dental care.2 Additionally, they typically have annual maximum benefit limitations and high cost-sharing. All and all, patients often get a bad deal on dental health plans.
Last year, spending on dental services dropped 20%.3 But most consumers and employers won’t see that money returned to them through rebates. Instead, it will line the pockets of dental insurance companies as a nice windfall.
But if we wouldn’t let health plans keep the excess premiums, why do we continue to let dental health plans go unchecked? This brief
outlines why it’s important to subject dental health plans to the same regulations as medical health insurance.
It’s an accident of history that oral health is treated separately from our medical system. When early dentists wanted to join the Medical College at the University of Maryland, the physicians refused them entry. Dentists set up their own line of study and that divide lives on. Fewer than 1% of health plans include dental benefits — usually dental health plans are purchased separately, often from a different company — to fill in what health plans leave out.4
Roughly 80% of Americans have some form of dental coverage.5 Of those with coverage, roughly two-thirds have private dental coverage, usually offered by an employer, though about 7% of Americans buy stand-alone dental plans through or outside of the ACA exchanges.6 Of those with private coverage, 77 million are in self-insured plans that are governed by the federal government and 88 million are in plans that are regulated by the states7. The remaining third have publicly funded coverage through Medicaid, CHIP, TriCare, or Medicare Advantage.
But even those who have employer-sponsored dental coverage often don’t get a great deal. A typical dental insurance plan offers what is known as”100-80-50″ coverage. This means the plan will pay 100% of the cost of routine preventive cleanings. Then it will cover 80% of the cost of basic services such as fillings or root canals, and 50% of the cost of major procedures such as crowns and bridges. Usually, there is a maximum benefit of $1,000-$2,000 per year. While only 6% of people exceed their maximum benefit per year, requiring one crown can cost over $2,000 — blowing through the maximum benefit.8
Dental costs have been increasing for decades. Between 1996 and 2016, per capita dental care expenditures increased 27%.9 Expenditures for dental services increased from $43 billion in 1996 to $96 billion in 2015 — a 200% increase.10 In 1996, the mean annual expense for a dental visit was $374, or $564 when adjusted for inflation, but by 2015, that had increased to $696. But the average dental plan benefit has not changed in 50 years. In 1970, a $1,000 benefit was worth about $6,909 in 2021 dollars.11 Yet, some plans still have a $1,000 maximum benefit in 2021 which no longer provides the same level of coverage because of inflation.
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