The federal government moved today to significantly tighten oversight of health insurance premiums by helping states allow the public to more easily get involved in the rate increase process.
It did so by announcing that effective later this month, consumers in every state can go to a federally-maintained website to view information explaining many proposed increases in the individual and small group market.
It also clarified that coverage sold to individuals or small groups through an association is subject to rate review, on or after November 1, 2011.
The new disclosures coincided with the effective date of the agency's rate review authority regulation. The rule was imposed by HHS under the Patient Protection and Affordable Care Act.
However, some states, such as Connecticut and California, have already used the new authority to force insurers to reduce proposed rate increases
Under the regulation, health insurers seeking to increase their rates by 10% or more must now submit their request to state or federal reviewers to determine whether they are reasonable or not.
Prior to PPACA, many states lacked the authority to review proposed increases to determine if they are reasonable or to act to limit rate increases, while others did not have the money to effectively review rates.
By accessing the website, consumers will be able to see a summary of the factors driving rate increases and an explanation provided by insurance companies for the proposed increase, HHS officials said.
In announcing that the rate review rule was now in effect, HHS official note that the agency has provided $250 million in grants to states to use to improve oversight of health insurance rates.
"Without oversight, scrutiny and public information, consumers and small businesses had few tools to protect against rate increases," HHS officials said.
HHS said that as of today, insurers proposing double-digit increases will have to provide clear information that indicates what factors are causing proposed increases.
"Experts will closely examine information about the underlying cost trends in health care to flag instances when insurance companies are unjustly raising costs," HHS officials said.
"This means consumers will no longer have to take the word of their insurance company; they will have an independent expert reviewing their proposed rate increase," HHS officials said.
They added that as of mid-September, consumers in every state will be able to go to HealthCare.gov to view easy-to-access, consumer-friendly disclosure information explaining proposed increases that are 10% or higher than last year's rates.
Consumers will see a summary of the key factors driving rate increases and an explanation provided by insurance companies for why the proposed increase is needed, HHS said.
"And, for the first time, consumers in every state will also be given the ability to comment on large proposed rate increases," HHS said.
"Thanks to the Affordable Care Act consumers no longer have to navigate the health insurance market blindly and on their own," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services.
"The next time your insurance company tries to raise your premium by double digits, it will have to give you and rate review experts a good reason or be labeled as unjustified, or in some states, denied."
Larsen said that the regulation clarifying the agency's views on health insurance sold through associations will impact a "significant portion" of individual and small group health insurance.
He said this coverage is sold and delivered in the same manner as the individual and small group coverage not sold through an association.
He added that some insurers sell a large portion of their business through associations established to meet the parameters of state laws (such as "travel clubs"), that in some cases may be used for the purpose of selling insurance outside the authority of state individual and small group rating laws.
"The only real difference is that the association exists as a quasi-employer group. But in reality, the enrollees do not work for the association," Larsen said.
"Today's rule closes this significant loop-hole, levels the playing field between issuers, and assures that all insurers in the individual and small group markets nationwide receive the benefit of rate review," he said.
You can view the regulation at: http://www.ofr.gov/inspection.aspx.