February 23, 2024

Prescriptions: Double-Digit Insurance Rate Increases Get More Scrutiny

Federal officials announced new rules on Thursday that require health insurers that decide to raise their rates sharply to provide more justification for the higher premiums.

“We know increased scrutiny works,” said Secretary Kathleen Sebelius, of health and human services, in making Thursday’s announcement. She cited several recent examples of state regulators, in places like Rhode Island and North Dakota, being able to pressure health insurers to reduce their proposed increases.

The federal health care law requires states to review large rate requests, and the new regulation sets the threshold for review at 10 percent, beginning Sept. 1. Federal officials eventually plan to establish different thresholds for different states. Federal regulators can conduct the reviews if state insurance regulators do not.

The new rule is going into effect as insurers are announcing record profits and flush reserves. In a front-page article in The Times last week, the sizable gains were linked to how people have been delaying or forgoing care, even as insurers have still been raising premiums. They claim they expect health care costs to go up, once people start to go to the doctor when they feel as if they have more money in their pockets.

“Focusing on health insurance premiums while ignoring underlying medical cost drivers will not make health care coverage more affordable for families and employers,” said Karen Ignagni, the chief executive of America’s Health Insurance Plans, a trade group, in a statement responding to the new rule.

She also warned against “an arbitrary threshold for review” that may not adequately take into account the complicated array of factors that determine premium rates.

While the new rule does not give states or the federal government new authority to reject rates before they go into effect, it forces insurers to explain the reasons behind any double-digit increases, according to federal officials. The rule only applies to policies offered to individuals or small businesses because large employers buying coverage for their workers tend to be more sophisticated purchasers, and some states may not have the authority to review premiums for large groups.

Federal officials emphasized that a key aspect of the new rule is the requirement that insurers publicly show their work on the federal government’s Web site and on their own. While some states have the authority to reject rates before they go into effect, the law relies more on increased scrutiny to pressure insurers to keep rates in check.

How effective do you think making insurers publicly justify large rate increases will be in keeping a lid on double-digit premium increases?

Article source: http://feeds.nytimes.com/click.phdo?i=9b4a3efabcee4987222560255b5a511e

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