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Release date 07/07/2011
WASHINGTON, D.C. — The Centers for Medicare and Medicaid Services (CMS) issued a report today identifying ten states that currently lack sufficient authority to review health insurance rate hikes as required under the Affordable Care Act. Beginning in September, rate increases in these states will be subject to review by CMS to determine whether they are unreasonable. The remaining 40 states will conduct their own reviews.
The enhanced scrutiny of rates and funding for states to conduct better reviews provided by the Affordable Care Act will help ensure that consumers in all 50 states won’t be hit by unfair premium hikes, according to Consumers Union, the nonprofit publisher of Consumer Reports.
But the consumer group emphasized that all states need to make sure they have the tools necessary to prevent unreasonable rate increases from going into effect. And states that have not fully exercised their authority need to act as quickly as possible to ensure consumers are protected.
“The Affordable Care Act established important new standards so that health insurance rates will be subject to closer scrutiny and stricter public disclosure requirements,” said DeAnn Friedholm, the director of Consumers Union’s health reform campaign (www.PrescriptionForChange.org). “But it will be up to the states to protect consumers when rate hikes are deemed unreasonable. We need to make sure that all states have the tools they need to stop insurance companies from gouging consumers with unfair premiums and that they use them.”
Starting September 1, rate increases higher than 10 percent will be reviewed by states with rate review procedures meeting certain standards and by CMS for states that do not have such standards. CMS will conduct rate review covering both the individual and small group markets in Alabama, Arizona, Idaho, Louisiana, Missouri, Montana and Wyoming. It will conduct small-group market reviews in Iowa, Pennsylvania and Virginia.
Insurers will have to submit a “justification” for an increase of 10 percent or more to CMS and state regulators prior to implementing the rate hike. CMS will post such justifications on its website. Insurers will be required to post a justification on their websites for rate hikes that are determined to be unreasonable.
Under the Affordable Care Act, the power to deny or modify each proposed rate increase remains with the states. But not all states have the power to prevent unreasonable rate increases from going into effect or have regulators who exercise this authority. Some state regulators closely examine proposed rate increases and insurers’ justifications, but other states have little capability to do so. 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. Most states have received federal grant funds to improve their rate review process.
Consumers Union has developed a state model rate review law for individual market plans and is working to encourage states to adopt reforms that ensure greater oversight, transparency and insurance company accountability.
Contacts:
Michael McCauley, Consumers Union, 415.431.6747 ext. 126 or mccami@consumer.org
David Butler, Consumers Union, 202.462.6262 or dbutler@consumer.org
Kara Kelber, Consumers Union, 202.462.6262 or kkelber@consumer.org
Consumer Reports is a nonprofit membership organization that works side by side with consumers to create a fairer, safer, and healthier world. For 80 years, CR has provided evidence-based product testing and ratings, rigorous research, hard-hitting investigative journalism, public education, and steadfast policy action on behalf of consumers’ interests. Unconstrained by advertising or other commercial influences, CR has exposed landmark public health and safety issues and strives to be a catalyst for pro-consumer changes in the marketplace. From championing responsible auto safety standards, to winning food and water protections, to enhancing healthcare quality, to fighting back against predatory lenders in the financial markets, Consumer Reports has always been on the front lines, raising the voices of consumers.
© 2011 Consumer Reports. The material above is intended for legitimate news entities only; it may not be used for advertising or promotional purposes. Consumer Reports® is an expert, independent, nonprofit organization whose mission is to work side by side with consumers to create a fairer, safer, and healthier world. We accept no advertising and pay for all the products we test. We are not beholden to any commercial interest. Our income is derived from the sale of Consumer Reports® magazine, ConsumerReports.org® and our other publications and information products, services, fees, and noncommercial contributions and grants. Our Ratings and reports are intended solely for the use of our readers. Neither the Ratings nor the reports may be used in advertising or for any other commercial purpose without our prior written permission. Consumer Reports will take all steps open to it to prevent unauthorized commercial use of its content and trademarks.
Consumer Reports is a nonprofit membership organization that works side by side with consumers to create a fairer, safer, and healthier world. For 80 years, CR has provided evidence-based product testing and ratings, rigorous research, hard-hitting investigative journalism, public education, and steadfast policy action on behalf of consumers’ interests. Unconstrained by advertising or other commercial influences, CR has exposed landmark public health and safety issues and strives to be a catalyst for pro-consumer changes in the marketplace. From championing responsible auto safety standards, to winning food and water protections, to enhancing healthcare quality, to fighting back against predatory lenders in the financial markets, Consumer Reports has always been on the front lines, raising the voices of consumers.
© 2011 Consumer Reports. The material above is intended for legitimate news entities only; it may not be used for advertising or promotional purposes. Consumer Reports® is an expert, independent, nonprofit organization whose mission is to work side by side with consumers to create a fairer, safer, and healthier world. We accept no advertising and pay for all the products we test. We are not beholden to any commercial interest. Our income is derived from the sale of Consumer Reports® magazine, ConsumerReports.org® and our other publications and information products, services, fees, and noncommercial contributions and grants. Our Ratings and reports are intended solely for the use of our readers. Neither the Ratings nor the reports may be used in advertising or for any other commercial purpose without our prior written permission. Consumer Reports will take all steps open to it to prevent unauthorized commercial use of its content and trademarks.