Jill Wechsler
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To assist states in evaluating and challenging premium rate increases, the Department of Health and Human Services (HHS) awarded
additional funds to states planning specific actions to improve rate review processes. These latest grants total more than
$100 million, and will help 28 states and the District of Columbia hire more rate reviewers, craft legislation and expand
information systems.
These funds augment $50 million in awards to 42 states in 2010, which already have yielded tangible results, according to
Steve Larsen, director of HHS' Center for Consumer Information and Insurance Oversight (CCIIO).
Arkansas improved its ability to negotiate lower rates with insurers, and North Carolina saved almost $15 million for beneficiaries
facing a steep increase. Oregon forced insurer, Regence, to lower a rate hike after public hearings. And Connecticut pressured
Anthem Blue Cross and Blue Shield to drop a 12.9% price increase.
Larsen expects the added grants will enable more states to develop legislation authorizing full rate review. About 30 states
have the power to approve, deny or modify insurance premium proposals; seven states plan to develop rate review legislation
and nine states are implementing recently passed legislation with the added funds. Many states will use the grants to hire
additional reviewers and to expand Web sites that post rate information. HHS began to post insurer rate proposals on its http://www.HealthCare.gov/ in October, making rate changes transparent to all.
The Obama administration considers state rate review important because the federal government doesn't have authority to block
insurance company rate hikes. However, health reform calls on HHS to review high rate increases for those states that fail
to establish effective rate review programs.
These policies, along with broader economic factors, may be discouraging steep premium hikes already. The Federal Employee
Health Benefits (FEHB) program announced that premiums will increase only 3.8% in 2012 for its 8 million enrollees, nearly
half of the 7.3 % boost for 2011.
PREMIUM TRENDS LEVEL OUT
White House policy advisor Nancy-Ann DeParle described this news as a sign that the sharp premium hikes experienced this year
may not recur in 2012. DeParle cited a Mercer survey indicating that employers expect health insurance costs to increase only
5.4% on average in 2012. She also was optimistic that there won't be a repeat next year of the 9% spike in health insurance
premiums for 2011 documented in a study by the Kaiser Family Foundation and the Health Research & Educational Trust.
Insurers blame high rate increases on a steady rise in underlying healthcare costs, as well as an aging population and added
coverage requirements. Yet, DeParle credits health reform for turning around the premium trend, citing rate review and transparency,
as well as the new medical loss ratio standards that will curb insurer profits and administrative spending. Analysts maintain
that reform policies are responsible for less than 2% of this year's rate increases.
In California, Kaiser Permanente was forced to cut rates by 1.2% for small employers and will issue premium credits totaling
$13.7 million to those who started paying higher rates beginning July 1.
Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.
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