Health Care Blog

Health Insurance Premium Hike Rejected

On Friday, consumers in Connecticut got some good news when the state insurance commissioner rejected Anthem Blue Cross and Blue Shield’s plan to raise insurance premiums by 20 percent.  The premium increase would have raised rates for 48,000 consumers.  After a thorough look at the facts, Connecticut officials determined that the rate hike was “excessive” and that no rate increases would be necessary. You can read media coverage of the Connecticut decision here.

The work in Connecticut shows the power of premium review – a process used by states to evaluate and approve proposed health insurance premium increases. Today, some states have stronger premium review processes than others, so the Affordable Care Act included $250 million in grants to states that will help them strengthen their premium review efforts and protect consumers. We’ve already seen premium review hold down rate hikes in California, Massachusetts, Maine and now, Connecticut and we expect to hear more good news from other states in the months ahead.

Supporting state efforts to crack down on premium hikes is just one of the steps the Affordable Care Act takes to help control health care costs for families nationwide. In addition to setting up exchanges -- new competitive health insurance marketplaces where Americans can shop for affordable coverage options – the law:

• Requires insurance companies to publicly justify any unreasonable premium increases beginning in 2011.
• Requires insurance companies to spend at least 80 percent of premium dollars on health care instead of overhead, salaries or administrative expenses, in 2011. If they don’t, they will be required to provide a rebate to consumers.
• Insurance companies who unreasonably raise rates between now and 2014 may be denied the opportunity to participate in the new exchanges.

The Affordable Care Act is making our health care system more transparent, giving consumers new rights and benefits and helping states control costs for families. We are committed to implementing the law quickly and carefully and delivering the benefits of reform to the American people.
 

Nancy-Ann DeParle is the Director of the White House Office of Health Reform

New Report: Affordable Care Act Could Save Families Over $3,000 Per Year

Today, a new report from the Commonwealth Fund demonstrates once again why we needed the Affordable Care Act and how the new law will help drive down premiums and save money for Americans across the country. The report found that premiums and deductibles in states were skyrocketing. According to the issue brief:

“[P]remiums for businesses and their employees increased 41 percent across states from 2003 to 2009, while per-person deductibles jumped 77 percent in large as well as small firms.”

And without action, the situation only would have gotten worse. The Commonwealth Fund researchers found that if the trends continued the “average premium for family coverage will rise 79 percent by 2020, to more than $23,000.”

Fortunately, the Affordable Care Act will help control premium cost growth, make our health care system more transparent and make care more affordable and accessible. Under the new law:

• Insurance companies will be required to spend at least 80 percent of premium dollars on health care instead of overhead, salaries or administrative expenses, in 2011. If they fail to do so, they will be required to provide a rebate to consumers.
• Insurance companies must publicly justify any unreasonable premium increases in 2011 and post them on their websites.
• The law includes $250 million to help states improve oversight of proposed private health insurance premium increases and take action against insurers seeking unreasonable rate hikes. $46 million has already been distributed to 45 states and the District of Columbia.
• Families with low and moderate incomes will have new, affordable coverage options.
• Americans will have access to new competitive marketplaces -- health insurance Exchanges – that will provide affordable private insurance to individuals and small businesses beginning in 2014. 
• Doctors and hospitals will be incentivized to better coordinate treatments and improve the quality of care for patients.

The Commonwealth Fund looks at these and other provisions in the law that could save money for American families. The report notes:

“If premium growth were to slow to 1 percentage point below the projected national growth rate, the cost of family coverage would drop an average of $995 annually by 2015. Annual savings for families and employ¬ers would increase to $2,323 by 2020…Even greater amounts could be saved if the annual premium growth rates were to slow by 1.5 percentage points. An average of $1,475 could be saved annually on family coverage by 2015. The savings would more than double to $3,403 annually by 2020.”

Our Administration has made great strides to implement the Affordable Care Act, and we’re moving forward to deliver the benefits of reform to the American people and save money for families nationwide.

 Stephanie Cutter is Assistant to the President for Special Projects