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CCH® BENEFITS — 10/12/11

New ACA Grants Help Protect Consumers From Unreasonable Health Insurance Premium Hikes

from Spencer’s Benefits Reports: The Department of Health and Human Services (HHS) has announced Patient Protection and Affordable Care Act (ACA) grant awards of $109 million to 28 states and the District of Columbia to help them protect consumers from “unreasonable” premium increases for health insurance. The HHS also released a new report, Rate Review Works, detailing how previous rate review grants are containing premium hikes and helping make the health insurance marketplace more transparent.

“We’re committed to fighting unreasonable premium increases and we know rate review works,” said Kathleen Sebelius, HHS Secretary. “States continue to have the primary responsibility for reviewing insurance rates and these grants give them more resources to hold insurance companies accountable.”

As of Sept. 1, 2011, the ACA requires health insurers seeking to increase their rates by 10% or more in the individual and small group market to submit their request to experts to determine whether the rates are reasonable. The ACA also requires insurance companies to publicly justify unreasonable premium rate increases. These provisions will bring greater transparency, accountability, and, in many cases, lower costs for families and small business owners who struggle to afford coverage, the HHS said in its grant announcement.

The ACA provides states with $250 million in Health Insurance Rate Review Grants, $48 million of which has previously been awarded to 42 states, the District of Columbia, and five U.S. territories. According to the new report, these grants and other state rate review efforts are making a difference:

• In July 2011, Oregon forced an insurer to lower by nearly 10% its request for a rate hike. This effort resulted in savings for approximately 60,000 consumers.
• Over the past year, the Arkansas Insurance Commissioner has been negotiating with insurance companies requesting rate increases greater than 10% on their individual health insurance products, and obtained a lower rate for approximately 90,000 insureds.
• Last year, North Carolina’s new rate review authority saved beneficiaries $4.5 million by reducing a rate increase request from the state’s largest insurance company.

The previous grants also contributed to nine states passing legislation to strengthen their ability to review and prevent excessive premium increases. These latest grants help to create a more level playing field for consumers by improving how states review proposed health insurance rates and holding insurance companies accountable for disclosing information about unreasonable rate increases.

States propose to use these newly awarded grant funds in the following ways:

• Introduce legislation: Seven states will introduce legislation to strengthen their authority to review and/or publicize proposed rate increases.
• Expand scope of rate review: 19 states and the District of Columbia plan to use grant funds to expand the scope of rate review, for example, by reviewing rates in new markets or by reviewing rates for new products.
• Improve rate filing requirements: All 28 states and the District of Columbia plan to use grant funds to improve rate filing requirements, such as requiring insurers to provide additional information on administrative costs and requiring insurers to file rate increases in a standardized format.
• Improve transparency and consumer interfaces: All 28 States and the District of Columbia also propose to use grant funds to improve consumer interfaces, such as developing a Rate Review website for the state’s Department of Insurance and providing opportunities for consumers to comment on proposed rate hikes via the website.
• Hire new staff: 23 states and the District of Columbia propose to hire new staff to help review rates and protect consumers.
• Improve information technology (IT): 27 states and the District of Columbia propose to use grant funds to enhance IT capacity through the development of new or improved rate reporting systems designed to collect more robust rate data and allow for advanced analysis of rate filings.

A summary of how each state will use the new grant funds and information about significant state achievements with previous rate review grants can also be found in the new HHS report.

For more information, visit http://www.healthcare.gov/law/resources/reports/rate-review09202011a.pdf and http://www.healthcare.gov/news/factsheets/2011/09/rate-review09202011a.html.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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