Federal rate reviews in progress

January 5, 2012

Health insurers asked to respond

Health care reform requires health insurers to submit rates for annual review through a process set up by the Department of Health and Human Services. This is intended to increase transparency in health insurance rates and potentially lead to lower premiums.

The rate reviews identify insurers with annual premium increases of 10% or higher. The law does not empower the government to force insurers to lower their rates through the review program. However, if the government believes the increase is unreasonable, the Department of Health and Human Services will publicly request that the insurer lower the amount or justify the need for it.

HHS has already flagged some rate increases as unreasonable. To find out whether any health insurers in your state have been identified in the rate review process, you can visit the government’s website and type in your state name.

Starting September 1, 2012, each state may have its own minimum premium increase that requires a review, based on the state’s unique premium trends, health care cost trends, and other factors.

Impact on individuals, employees and employers:

• For employers and employees, the rate reviews are meant to insure greater transparency on health premium rates and will provide information on why insurers are asking for significant increases in premium.
• When the health insurance exchanges are put in place the exchanges will be able to enforce their objections to rate increases by not allowing those insurers to do business through the exchanges. There is some speculation that the rate review process could drive some insurers to withdraw from the market in some states.