New HHS Rule Hopes To Rein In Some Runaway Health Insurance Premiums

According to a recent study, the cost of health insurance coverage for a family of four has soared 131% since 1999. And the insurance companies continue to seek double-digit rate hikes even while profiting from peoples’ reluctance to seek medical care. Thus, as part of the Affordable Care Act, the Dept. of Health & Human Services has just issued a new to help define what constitutes an unreasonable health insurance rate increase.

The major stipulation of the new rule, which goes into effect on Sept. 1, is that insurers seeking rate increases of 10% or more on policies in the individual or “small group” category during a 12- month period are required to publicly disclose and justify the proposed increases. The increases will be reviewed by either state or federal experts to determine their level of unreasonable-ness.

After a year, it will be up to each state to either keep that 10% threshold or choose a different number based on its particular range of insurance and health care costs.

“Consumers are tired of double-digit rate hikes year after year at a time when many health insurers continue to make record profits,” said DeAnn Friedholm, the director of Consumers Union’s health reform campaign (www.PrescriptionForChange.org). “Too often, health insurers have been able to get away with raising rates without having to justify why premiums are going up. This new rule sets an important new standard for when rate increases are unreasonable and requires insurers to explain why those rate hikes are needed. It will help consumers better understand why their rates are increasing and give them an opportunity to provide input to regulators when rate hikes are under review.”

The crazy-high costs of individual policies finally came to national attention in early 2010 when insurance giant WellPointattempted to raise rates on individual policyholders in California by upward of 39%. After it came under scrutiny by state authorities and HHS, WellPoint settled with a mere 14-20% raise on these policyholders.

While this new rule currently only deals with individual and small group policies, HHS is also requesting comment from the public on its intention to apply the rule to coverage sold through associations.

Affordable Care Act helps fight unreasonable health insurance premium increases [HHS.gov]