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Feds Propose Review of Health Insurance Rate Hikes

Cheryl Clark, for HealthLeaders Media, December 21, 2010

The organization wants the rule to include "all health insurance rate increases imposed since the approval of the health reform law," and added that it should be strengthened to require insurance companies to publicly reveal the actuarial assumptions and predictions it used to produce their rate schedules.

As drafted, the rules allow insurers to keep secret many details of rate calculations, the group said. It also does not require approval of the rates before they take effect.

"Consumers have faced double-digit premium increases for the past year as insurance companies raced to jack up prices in advance of reform," said Carmen Balber, director of Consumer Watchdog's Washington D.C. office.

"The new rules rely on public disclosure to shame insurance companies into charging consumers fairer prices, and this symbolic stoning may work to hold down increases in some cases. However, regulators must ultimately have the power to modify and deny premium increases in order to prevent insurers from imposing unreasonable premium increases on consumers," Balber said.  

The issue received intense focus when Anthem Wellpoint filed notice that it needed to raise premiums for California enrollees 39% for 2010 plans.

A subsequent examination by a California auditor determined that the company had used erroneous data in its calculations, provoking the company to withdraw its request. 

But several other large insurance companies also have filed statements they needed double digit rate increases to meet costs and expanded need for services.

The proposed rule may be viewed here.

Cheryl Clark is senior quality editor and California correspondent for HealthLeaders Media. She is a member of the Association of Health Care Journalists.

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