Health Plans
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

HHS Issues Final Regulation on Health Insurance Rate Hikes

Margaret Dick Tocknell, for HealthLeaders Media, May 20, 2011

The final regulation for health insurance rate increases for the individual and small group markets will require insurers to publically disclose and justify any rate increase in excess of 10%. The proposed increases will be subject to state and federal review.

Department of Health and Human Services Secretary Kathleen Sebelius announced the regulation at a Thursday morning conference call. She noted that insurers recently posted record profits while consumers have faced healthcare costs that have often increased at a faster rate than wages.

The goal of the regulation, which is effective Sept. 1, 2011, is to bring transparency and some uniformity to the rate increase review process. While many states review proposed increases to determine if they are reasonable, other states do not have the legal authority or resources to effectively review rates.

Also, while some states have the authority to deny or reduce proposed rate increases, most do not. With the new rule, significant rate increases in all states will be reviewed by independent experts and disclosed to the public. While it's expected that most states will take on this responsibility themselves, HHS will serve as a backup for states that don't have the resources or authority to review rates.

Through the Affordable Care Act more than $44 million in grant money is available to help states strengthen their oversight ability or create a rate review process. Already 43 states and the District of Columbia have received the grants.

Under the final regulation:

  • Beginning Sept. 1, 2011, insurers requesting rate increases in excess of 10% for the individual and small group markets will be required to publicly disclose the proposed increases as well as the justification for them. The increases will be reviewed by either state or federal experts to determine whether they are unreasonable.

Comments are moderated. Please be patient.