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. [Read more…]

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