Double-digit health insurance premium hikes will be thoroughly reviewed so that consumers will be able to fully comprehend why they are being sought, the Department of Health and Human Services (HHS) has announced. The aim of these new rules is to help keep insurance costs down and provide consumers with better value for money. Any increase of at least 10% will be reviewed by federal or state officials, the HHS added.
HHS Secretary Kathleen Sebelius, said:
“Effective rate review works – it does so by protecting consumers from unreasonable rate increases and bringing needed transparency to the marketplace. During the past year we have worked closely with states to strengthen their ability to review, revise or reject unreasonable rate hikes. This final rule helps build on that partnership to protect consumers.”
As from the beginning of September this year any proposed 10% hike for the majority of individual or small group insurance plan will require a review by independent experts. The main responsibility for reviewing such cases will be done by individual states, with HHS serving as back up if further resources or authority are required. $44 million has been awarded by HHS to states for this purpose, and another $200 million will continue to be available.
As from September 2012, each state will place its own hike threshold, depending on local insurance and health care costs. The HHS says it will liaise with states when defining these thresholds.
The HHS says it is announcing this final rule after health insurance companies reported huge profits. It appears that medical costs are not rising as fast as insurance companies had predicted when they set their 2011 rates in 2010. Unfortunately, many rates that small employers and individuals are paying now do not reflect these reduced costs.
The insurance sector is now bound to provide individuals with user-friendly information about why unreasonable rate hikes occur. They will have to post their reasons on their websites for all to see, and also on the HHS Affordable Care Act website.
Steve Larsen, director of the Center for Consumer Information and Insurance Oversight,said:
“Strong and transparent rate review processes are necessary to help bring down costs for consumers. Rate review will ensure that increases are based on reasonable estimates and real-time data on medical cost trends and health care utilization.”
“Fact Sheet: Fighting Unreasonable Health Insurance Premium Increases”
Written by Christian Nordqvist