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HHS Gives States $109M to Bolster Premium Hike Oversight

 |  By John Commins  
   September 22, 2011

The federal government will grant $109 million to 28 States and the District of Columbia to help them "fight unreasonable premium increases and protect consumers."

The Department of Health and Human Services released a report Tuesday entitled Rate Review Works that HHS Secretary Kathleen Sebelius said details how previous rate review grants are fighting 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," Sebelius said in prepared remarks. "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, the Affordable Care Act requires health insurers seeking rate hikes of 10% or more in the individual and small group market to submit their request to experts to determine whether the rates are unreasonable.

ACA also requires insurance companies to publicly justify unreasonable premium rate increases. The Obama administration has said the provisions will bring greater transparency, accountability, and, in many cases, lower costs for families and small business owners who struggle to afford coverage.

The review program has been fiercely resisted by America's Health Insurance Plans, the lobbying arm of the health insurance industry. AHIP spokesman Robert Zirckelbach repeated earlier complaints that the federal government was holding health insurers accountable for costs that were beyond their control.

"The current focus on rate review ignores the soaring cost of medical care that is driving up the cost of coverage and taking up a greater and greater share of federal and state budgets," Zirckelbach said Tuesday in an email to media. "Now is the time to focus on the underlying cost of healthcare in order to make coverage more affordable for families and employers and finally put our safety net programs on sustainable and fiscally-responsible paths. 

ACA provides states with $250 million in Health Insurance Rate Review Grants, $48 million of which has already been given to 42 States, the District of Columbia and five territories.

Sebelius said the grants and the review efforts they have generated are already having an impact on premium hike proposals. In July, Oregon forced an insurer to lower its request for a rate hike by nearly 10% that would have impacted about 60,000 consumers. Arkansas regulators recently negotiated a lower rate affecting approximately 90,000 policyholders.

 In 2010, North Carolina regulators saved beneficiaries $4.5 million by reducing a rate increase request from the state's largest insurance company. The grants have also been used in nine states to help pass legislation to strengthen review and processes.

Sebelius said states are using the latest round of grants to improve filing requirements, transparency, and consumer interface, hire new staff, improve IT, expand the scope of review, and introduce legislation to strengthen oversight.

Another provision of ACA requires health insurers to spend at least 80% of premium dollars on healthcare and quality-improvement activities as opposed to overhead, advertising, and executive bonuses.  If they don't they must reduce premiums or pay rebates to consumers and employers.

ACA also makes small businesses eligible for federal tax credits of up to 35% of the cost of coverage for their workers. That amount rises to 50% in 2014. Also in 2014, insurance exchanges created by ACA supposedly will use competition and transparency, including information on unjustified premium increases, to help make insurance more affordable, HHS said.

 
 

 

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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