In early June, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius publicly encouraged governors to ensure that they have strong oversight processes in place to review insurance rate increases in their states. Sebelius emphasized the key role that states play in regulating insurance companies and noted that some states have rigorous oversight processes, while in other states, insurance companies are able to increase rates without filing in advance with the insurance commissioner.
This urging from Sebelius followed a letter she wrote to governors and state insurance commissioners in May recommending that they re-examine any Wellpoint health insurance rate increases. Anthem Blue Cross, a WellPoint affiliate, was prevented from raising premiums in California by 39 percent when the state found that the rate hikes were based on erroneous trend lines and unreasonable assumptions.
Some states have already been working to improve oversight. In New York, Governor Paterson announced June 9 that he signed a bill (S. 8088) to require that health plans obtain prior approval from the state Insurance Department before increasing premiums. The law, which took effect immediately, requires public notice and the opportunity for public comment on proposed rate increases. The Insurance Department will have 60 days to approve rate increase applications and 20 days after that to request further information from health plans. By reducing the number of individuals who will switch to Medicaid from private insurance plans due to unaffordable premiums, the state expects that it will save an estimated $70 million per year.
Also on June 9, the Pennsylvania Insurance Department announced that it plans to strengthen oversight of insurance companies after what they stated was a pattern of controversial rate increases. The Insurance Department said that it was investigating the state’s nine largest insurance companies amid concern that health insurers are raising rates before the Affordable Care Act goes into effect. This is an issue that President Obama is taking seriously, as evidenced by his most recent meeting with insurance executives during which he warned them against imposing significant rate increases in anticipation of tightening regulation under the new law. While the states, not the federal government, have authority to regulate health insurance premiums, the Obama administration has made it clear that it will make public the issue of industry pricing and expose any steep increases.
Other Sources:
“Sebelius Urges Governors to Ask for Authority to Review Rate Hikes,” BNA’s Health Care Policy Report, June 14, 2010.
“Governor Paterson Signs Bill Requiring Prior Approval of Premium Increases,” BNA’s Health Care Policy Report, June 14, 2010.
