Consumers will soon get some help in the fight to keep medical insurance costs in check. If insurance companies want to raise rates or premiums for individuals or small-group policies, they'll now have to run them past state regulators—and possibly federal agencies as well.
Typically, local state government agencies govern how medical insurance companies operate within their borders. But some states lack the resources or proper review processes or standards, says the U.S. Department of Health and Human Services. And In most states, consumers do not receive adequate information about rate increases and are not able to participate in the review process through hearings or other public forums.
Under the new Affordable Care Act, however, that will all change.
Now, medical insurers will have to submit "justification" for any proposed rate increase of 10 percent or more to state regulators. For states that don't have an adequate review process, the proposals will be handled by the HHS' Centers for Medicare and Medicaid Services. (Already, CMS will review rate hikes for both the individual and small-group insurance markets in Alabama, Arizona, Idaho, Louisiana, Missouri, Montana and Wyoming. It will conduct small-group market reviews in Pennsylvania and Virginia.)
If regulators determine that the proposed insurance rate hikes are unreasonable, companies will be required to post on their websites their justifications for consumers' review.
By mid-September, HHS plans to establish a portion on its HealthCare.gov website where consumers in all 50 states can access information about proposed rate hikes that are 10 percent or higher than previous year's rates. Consumers will also be allowed to submit comments on proposed insurance company rate increases.
“These new rules combined with the funding states are receiving under the Affordable Care Act will trigger much closer scrutiny of health insurance rate hikes,” said DeAnn Friedholm, the director of Consumers Union’s health reform campaign, www.PrescriptionForChange.org. "But ultimately, it will be up to the states to protect consumers when rate increases are found to be unreasonable."
Consumers Union is the non-profit consumer advocacy arm and publisher of Consumer Reports and the ConsumerReports.org website.
Health Insurance Rate Review: Lowering Costs for American Consumers and Businesses [Centers for Medicare & Medicaid Services]
State-federal review of health insurance rate increases begins, double-digit price hikes must be justified [BusinessWire via CBS MarketWatch]
New Affordable Care Act Insurance Rate Review Rules Start September 1 [Consumers Union]