HHS Touts Rate Review Consumer Savings; States Using Grants, With More Coming

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A new report on health insurance premium rate reviews in the states--implemented under the Affordable Care Act--shows that consumers have saved an estimated $1 billion on health insurance premiums since states began reviewing premium increase proposals.

The report, released by the Department of Health and Human Services Sept. 11, looked at the impact of new rate review rules that prevent insurance companies in all states from raising rates without accountability or transparency.

“The health care law is holding insurance companies accountable and saving billions of dollars for families across the country," HHS Secretary Kathleen Sebelius said in a press release. “Thanks to the law, our health care system is more transparent and more competitive, and that's saving Americans real money."

Beginning Sept. 1, 2011, the ACA implemented federal rate review standards. These rules ensure that, in every state, insurance companies are required to publicly submit for review and justify their actions if they want to raise rates by 10 percent or more, HHS said. To assist states in this effort, the ACA provides them with Health Insurance Rate Review Grants to enhance their rate review programs and bring greater transparency to the process. According to HHS, 42 states have used their rate review grant funds to make the rate review process stronger and more transparent.

HHS Sept. 11 also touted $1.1 billion in savings to consumers from rebates under the medical loss ratio provisions of ACA.

Forty-four states have programs to review the proposed increases; in a state that does not have such a program, HHS reviews the proposed increases. All explanations of the increases and the state's or HHS's decisions are made available to the public on HHS's website at http://companyprofiles.healthcare.gov/.

According to the report, 2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers, insurers proposing increases at or above 10 percent must submit for review clear information indicating the factors contributing to the proposed increases.

Grants Program Working.

To assist states in developing rate review programs at least as rigorous as the federal standards set forth in ACA, the law established the Rate Review Grants Program, a $250 million program providing states with funds to strengthen and improve their rate review processes, monitor premium increases, and make health insurance rates understandable for all consumers, HHS said.

To date, the Rate Review Grants Program has awarded $160 million in grants to 45 states, the District of Columbia, and several territories. States have multiple opportunities to apply for a rate review grant, and HHS anticipates making additional awards in 2012 and 2013.

Review Findings.

Of the rate review determinations to date, according to the report, 50 percent have resulted in consumers receiving either a lower rate increase than requested or no increase at all.

In addition:

• 12 percent of submissions were withdrawn prior to determination, in part because some insurers were not willing to have their proposed rate increase labeled as “unreasonable.”

• States made decisions on 69 percent of the proposed increases and HHS reviewed the remaining 31 percent.

• To date, based on proposed rate filings at or above the 10 percent threshold, about 64 percent of determinations have been found to be unreasonable or have been modified or withdrawn.

• The implemented rate increases were reduced on average by 2.8 percentage points.


Looking to the future, the report noted that in addition to the already completed rate review enhancements, states continue to use grant funds to build stronger rate review programs. Twenty-three states have been working to expand the scope of their rate review authority and 39 states continue to work to improve the quality and efficiency of their rate review programs. In the process of making improvements, states used grant funds to create job positions for actuarial, legal, and consumer support staff.

The rate review report is at http://www.healthcare.gov/law/resources/reports/rate-review09112012a.html. Information on how states are using their rate review grant funds is at http://www.healthcare.gov/law/resources/reports/rate-review09202011a.pdf. General information about rate reviews is at http://www.healthcare.gov/law/features/costs/rate-review/.

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