Starting in 2011, health insurance companies will be limited in how much they can charge you for insurance. If you work for a large employer, your health insurer will have to use at least 85 percent of your premiums to pay for actual health care or activities that improve health care quality. If you’re self-employed or work for a small business, your health insurer will be required to use 80 percent of your premiums for health care and improving health care.

That means that health insurance companies can no longer divert more than 20 to 25 percent to profits, or salaries, or marketing, and other overhead.

How much will this affect you? Potentially, a great deal.

Kathleen Sebelius, secretary of the Department of Health and Human Services (HHS), told reporters at a press event that some health insurers currently spend less than 60 percent of premium revenues on health care. And that drives up your costs for health insurance:

“Those overhead costs contribute little or nothing to the care of patients and to the health of Americans. And while some administrative costs are certainly necessary, we believe that they have gotten out of hand. And that’s going to change in 2011.”

But what if health insurance companies fail to follow the new regulations? Starting in 2012, if your insurer doesn’t spend 80 to 85 percent of revenues on health care or activities that improve health care quality, you’ll be due a rebate on your premiums.

It’s about time that consumers had some clout when dealing with health insurance companies, and I applaud these changes. I also look forward to hearing your stories about how the new health care law affects you and your family. Has the new law helped your family get or keep health insurance? Get better care? Please let me know in the comments section.

– Yvonne S. Thornton, MD, MPH