Missouri Insurer to Issue $1B in Rebates to Policyholders

Ambetter from Home State Health, Missouri's largest individual health insurer, will pay more than $1 billion in rebates to its customers for failing to meet federal spending requirements on medical care. The company, a subsidiary of Centene Corporation, spent too little on healthcare services and too much on administrative costs, triggering a massive refund under the Affordable Care Act.

Ambetter Violates Federal Healthcare Spending Rules

Under the Affordable Care Act (ACA), health insurance companies must adhere to the Medical Loss Ratio (MLR) rule. This regulation requires insurers to spend at least 80% of the money they collect in premiums on healthcare claims and activities that improve health quality.

Ambetter from Home State Health did not meet this threshold. According to letters sent to policyholders dated September 10, the insurer spent only 71.4% of its approximately $12 billion in premiums on medical care over the 2022-2024 period. The remaining 28.6% went to administrative expenses and profit.

To comply with the law, Ambetter must now refund the 8.6% difference to its customers. This results in a total rebate of $1.01 billion, which is being distributed to policyholders in the form of checks.

Impact on Missouri Consumers

Ambetter is the dominant provider in Missouri's individual insurance marketplace, covering about 46% of the 270,275 residents who buy their own plans. The rebates, which began arriving in mailboxes recently, are substantial, equating to more than one month's premium for each affected customer.

The Centers for Medicare and Medicaid Services (CMS) oversees the MLR reporting process, analyzing data on a three-year rolling average to determine if rebates are necessary. In 2023, CMS directed insurers nationwide to rebate a total of $957 million, an amount now surpassed by this single Missouri-based action.

Another insurer, United Healthcare, is also issuing rebates to its Missouri customers for both individual and group plans, although the specific state-level amounts have not been disclosed. Nationally, United Healthcare will rebate $192.2 million for group plans and $167.1 million for individual plans.

Future Premium Changes

Despite the massive rebate, Ambetter customers may see some relief in upcoming premium costs. The company has proposed one of the smallest rate increases in the state, seeking an average hike of just 1.9% starting January 1.

This contrasts sharply with other insurers in Missouri. Seven other companies are proposing average increases ranging from 4.6% to as high as 29.2%. The Missouri Department of Commerce and Insurance will announce the final approved rates by October 31.

Businesses Face Rising Health Insurance Costs

While some individual policyholders receive rebates, Missouri businesses are bracing for a sharp increase in health insurance costs. Projections for 2026 indicate that premiums for employer-sponsored plans are set to climb significantly, forcing many companies to pass the costs on to their employees.

According to the consulting firm Mercer, large companies can expect an average benefit cost increase of 6.5% per employee in 2026, the largest jump in 15 years. For small businesses with fewer than 50 employees, the increases could be even more severe. Blue Cross and Blue Shield of Kansas City, for example, has requested an average rate increase of 19% for its small-group plans.

"We hold our breath and cross our fingers and hope it’s not awful," said Karen Crnkovich, owner of DMC Service Inc., describing the annual stress of finding an affordable plan for her 23 employees.

Small Businesses Seek Alternatives

The rising costs are pushing small business owners to explore different models for providing health benefits. Tania Hewett-Mader, co-owner of Alma Mader Brewing, switched her company of five employees from a traditional insurance plan to a self-funded model to control costs.

In a self-funded plan, the business pays for employee medical claims directly from a pool of funds rather than paying a fixed premium to an insurer. While this can save money, it also transfers more financial risk to the employer.

"We had to make a decision at that point," Hewett-Mader said, explaining the move away from an unaffordable traditional plan. Her company now faces a 13% increase in its self-funded plan due to higher claims, but she noted it remains more manageable than the alternatives.

Economic Consequences of Higher Premiums

As employers grapple with surging premiums, many are expected to shift more of the financial burden to their workers. A Mercer survey found that nearly 60% of large employers plan to implement cost-cutting measures, which often means higher deductibles, copays, and out-of-pocket expenses for employees.

This trend adds financial pressure to households already dealing with inflation. Research from KFF shows that nearly half of U.S. adults already struggle to afford healthcare, and more than one-third have postponed care due to cost.

Economists warn that rising healthcare spending can have broader economic effects. "When people have to spend more on health care... they’ll have less money to spend on other things, like local stores and restaurants," said Frank Lenk, an economist with the Mid-America Regional Council.

The shift toward self-funded plans by healthier companies could also have long-term consequences. As these groups leave the traditional insurance pool, the remaining risk pool becomes smaller and potentially sicker, which could drive premiums even higher for those in fully insured plans. Health care actuary Derek Skoog called the long-term viability of the fully insured group market a "pretty big concern" if this trend accelerates.