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For the past decade, Americans have seen double-digit health insurance premium increases. From 2000 to 2010, premiums rose 114 percent and nothing suggests that the quality of insurance coverage improved. In many cases, insurance companies had free reign and weren’t held accountable when they attempted to raise rates on consumers. Only 26 states and the District of Columbia can reject premium increases that are excessive or unjustified, and many of these states lack the resources to use this authority to protect consumers.
That’s beginning to change. Here’s how:
First, the Affordable Care Act gives states $250 million to enhance their rate review procedures so they can better protect consumers and stop unreasonable premium hikes from taking effect. 46 states and the District of Columbia have already received a share of these resources and they’re using the new funds to make more information about premiums available to the public and get the authority they need to oversee the insurance marketplace and protect consumers.
Second, the Affordable Care Act brings new transparency to the health insurance market by requiring insurance companies to publicly justify any unreasonable premium increases. Under the new rules, if an insurance company proposes to raise rates by 10% or more, they must publicly disclose on their own, as well as HHS’ website the justification for the increase. The appropriate state insurance commissioner or, if a State does not have an effective rate review process, HHS, will then review the insurance company’s justification to determine whether or not the increase is justified. In some states like, Washington and Maine, all new insurance premium rates, regardless of whether they are below 10% need to be approved by the state insurance commissioner’s office ahead of time, and will continue to be reviewed moving forward.
Shining a bright light on health insurance premium increases and conducting aggressive rate review will help control costs for American families. And we know rate review works. States like Washington and Maine have strong review laws that have been effective at protecting their residents from out-of-control premium increases. And just recently, Connecticut regulators recently rejected a proposed 20 percent rate increase that would have impacted 48,000 consumers after their review found that such an increase was unjustified and excessive.
Health and Human Services Secretary Kathleen Sebelius has recorded a new White House White Board video to explain just how this new rule works, and how rate review helps states review and crack down on unjustified premium hikes and protect consumers:
Stephanie Cutter is Assistant to the President for Special Projects