As of Sept. 1, 2011, U.S. health insurers seeking to increase their rates by 10 percent or more must submit their request to state or federal reviewers to determine whether they are reasonable or not. The rate review program, created under the Patient Protection and Affordable Care Act (PPACA), is intended to bring greater transparency to health care coverage.
In a growing number of states, regulators now have the authority to deny or reduce rate hikes found to be excessive. Insurers that propose double-digit rate increases are required to post their justifications on their website, and state and federal regulators will post them as well.
"Rate review will shed a bright light on the industry's behavior and drive market competition to lower costs," said Kathleen Sebelius, Secretary of Health and Human Services (HHS).
Insurers proposing double digit increases will have to provide information that indicates what factors are causing proposed increases. Starting mid-September, consumers can go to www.HealthCare.gov to view disclosure information explaining proposed increases that are 10 percent or higher than the previous year's rates. Consumers will see a summary of the key factors driving rate increases and an explanation provided by insurance companies for why the proposed increase is needed. In addition, consumers will have the ability to comment on large proposed rate increases.
States continue to have the primary responsibility for reviewing insurance rates. Under PPACA, the federal government will provide $250 million in Health Insurance Premium Review Grants to states over five years. States and territories are already using $48 million in rate review grants, and HHS has made an additional $200 million available to states and territories to improve their rate review processes.
Big Health Insurance Rate Hikes Face Scrutiny Under Final Rule, SHRM Online Benefits Discipline, May 2011
Employer Medical Costs Expected to Rise 8.5% in 2012, SHRM Online Benefits Discipline, May 2011
SHRM Online Benefits Discipline
SHRM Online Health Care Reform Resource Page