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26-02-2013 | Article

Health insurance premium jack ups hit a slowdown

Abstract

HHS Rate Review report

medwireNews: The Department of Health and Human Services (HHS) is crediting an unprecedented level of scrutiny and transparency brought about by the Affordable Care Act (ACA) to explain the precipitous drop in health insurance companies requesting to raise their rates by 10% or more.

Health insurance companies in every state must now publicly justify their wanting to raise their rates by double-digits by providing reasons that consumers can easily understand. Kathleen Sebelius, Secretary of HHS, wrote in a blog on HealthCare.gov that the implementation of this ACA rule, which includes posting unreasonable rate increases online, explains the results of a recent report that showed a drop in requests for such increases from 75% of all requests in 2010 to 14% in 2013.

Furthermore, according to the report, rate increases that do occur are often not as high as those the insurers initially applied for: for rate requests of 10% or more, 50% of insurers carried through with it while the other half hit consumers with a rate increase that was lower than requested or no rate increase at all.

"The Affordable Care Act prohibits some of the worst insurance industry practices that have kept affordable health coverage out of reach for millions of Americans," Sebelius said in her blog. "The Effective Rate Review program is one of many in the health care law aimed at protecting consumers."

Health Insurance Rate Review Grants have provided 44 states with $ 250 million to enhance their rate review process - with 40 now having improved websites that allow for searchable rate filings, public comment, live streaming of rate hearings, and plain language explanations of how rates are reviewed and adjusted.

This rate review program links together with a rule requiring insurance companies to spend approximately 80% of premiums on healthcare or, if not, provide rebates to consumers. Sebelius noted that insurance companies that did not fulfill the "80/20 rule" ended up providing 13 million Americans with $ 1.1 billion in rebates, which equates to an average of $ 151 per household beneficiary.

In addition to the rate findings, the HHS issued a final rule that implements five consumer protections as stipulated in the ACA. The protections guarantee that all consumers are eligible to purchase insurance, which must have premiums that are solely based on age, tobacco use, family size, and geography. Health insurance companies will no longer be able to refuse renewal or charge higher premiums to higher risk enrollees.

By Peter Sergo, medwireNews Reporter