HHS says insurance rate reviews are working

The administration has reviewed nearly 200 proposed premium hikes of 10% or more, finding two insurers’ increases in nine states to be excessive.

By — Posted March 30, 2012

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The Dept. of Health and Human Services says its authorization under the health system reform law to review double-digit premium increases by insurers has led to fewer such rate hikes being proposed in the first place.

HHS Secretary Kathleen Sebelius announced March 22 that the department had undertaken 186 reviews of health plans that had proposed raising premiums on subscribers by 10% or more. After the reviews, HHS determined that two insurers had proposed unreasonable rate hikes as high as 24% on enrollees in nine states — Arizona, Idaho, Louisiana, Missouri, Montana, Nebraska, Virginia, Wisconsin and Wyoming. The two insurers named in the reviews were John Alden Life Insurance Co. and Time Insurance Co., both Assurant Health plans that are based in Milwaukee.

“Thanks to the Affordable Care Act, consumers are no longer in the dark about their health insurance premiums,” Sebelius said. “Now insurance companies are required to justify rate increases of 10% or higher. It’s time for these companies to immediately rescind these unreasonable rate hikes, issue refunds to consumers or publicly explain their refusal to do so.”

In a statement, Assurant insisted that the rate increases were reasonable and necessary to continue providing the coverage that enrollees needed. The company also noted it was bound by the same requirements under the health reform law that insurers spend a certain percentage of premium dollars on patient care and quality improvement.

HHS cannot require insurers to rescind rate hikes that it deems unreasonable, but a growing number of states have the authority to do so. According to HHS, 37 states now have this authority, up from the 30 that had it before the enactment of the health reform law.

But the department said the public scrutiny that comes with reviews of double-digit premium hikes acts as a deterrent on unreasonable increases. HHS said states reported a 4.5% decrease in the number of proposed rate hikes in the last quarter of 2011 alone. Sebelius said that the pressure on insurers that might face state regulatory action or be required to explain to HHS why they are raising rates by so much is prompting plans to propose fewer increases in the first place.

More information about the 186 increases reviewed by HHS so far and the insurers that proposed them are on a government website (link).

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