As a result of health care reforms made by Congress last year, Wisconsin citizens will receive more than $16 million in refunds from insurance companies as part of mandates, which some worry may drive companies out of business.

According to a statement released Thursday by the Kaiser Family Foundation, a foundation focused on major health care issues facing the U.S., insurance issuers nationwide are now being held accountable for the amount of money they spend on overhead and employee salaries.

As part of the Affordable Care Act, large group insurance companies are now required to spend 85 percent of premium dollars on health care, and small group companies must spend 80 percent on health care. The medical loss ratio policy requires any overages of non-health care spending such as salaries and marketing be refunded to customers, according to the statement.

Nationwide, $1.3 billion in overages will be returned to policyholders for the year of 2011. In Wisconsin, individuals will receive their refunds by August, according to Robert Kraig, executive director of Citizen Action of Wisconsin.

The policy is the first of the ACA mandates to be enacted and will require annual refunds should insurers continue to spend less than the stated amount on health care, Kraig said.

“It’s one of the tangible benefits of the ACA that people are experiencing already,” Kraig said. “For the first time, there are limits on profits and overhead and salaries that insurance companies can spend, as opposed to health care spending.”

More efficient spending of premiums may also be helping to reduce insurance rates. Experts have claimed that several insurance companies have kept rates lower to reduce costs due in returns, Kraig said.

Although the $16 million due to Wisconsin policyholders is somewhat insignificant compared to the $1.3 billion to be paid nationally, Kraig said it shows state insurance issuers are mostly already in compliance with the policy, spending premium money efficiently.

“We’re not California, we’re not a huge state. We don’t have lower rates than other states; we’re relatively expensive,” Kraig said. “We just don’t have many insurance companies that don’t already meet these standards.”

According to Kraig, Wisconsin’s insurance market is much different than other states, with many nonprofit providers. Insurance industries in the rest of the nation, he said, are largely dominated by big for-profit agencies, which can spend as much as 30 to 40 percent of premiums on salaries and overhead.

While these rebates will return money to consumers, Gov. Scott Walker has indicated he is concerned that these mandates may drive insurance companies out of the state, said Michael Hintze, state coordinator of Tea Party Patriots Wisconsin. Walker has unsuccessfully requested a federal waiver to exempt Wisconsin from the policy.

“Insurance companies may decide to just get out of the business entirely, and the same thing with health care providers,” Hintze said. “If the government starts setting costs or fees, then you’re going to have people leaving the field.”

It’s unclear how the new policy will affect insurance companies in the future, but Kraig said he believes the comprehensive ACA will make the industry more efficient and effective.

“In the new ACA model hopefully they’ll be able to spend less time denying claims and turning away individuals, which will make them more efficient,” he said. “Much more of the premium dollars will go to actual medical care.”