Jamie Gooch

While most states have policies to evaluate premium increases, the Rate Review Program under the Patient Protection and Affordable Care Act (PPACA) puts a brighter spotlight on states' authority.  

In the year since the program went into effect, premiums in the individual and small-group market were lowered by $1 billion because of states' new empowerment to review rates.  Such announcements concern many in the insurance industry because the policies focus on lowering premiums, not lowering the medical costs that are ultimately responsible for the premiums.  

"The debates are all about how much premiums are going up, not what's driving those increases," says Robert Zirkelbach, vice president of strategic communications for America's Health Insurance Plans (AHIP). "Policy makers need to focus on what's really driving up healthcare premiums, such as hospital stays, prescription drug costs and new medical technologies." 

Adding to the debate, the Kaiser Family Foundation (KFF) has released its own analysis of the Rate Review Program recently. It analyzed 846 rate filings from 41 states and Washington, D.C.-798 of which were reviewed by state regulators.  

According to KFF's analysis, 20% of the rate filings in the review process resulted in a lower premium increase than the insurer had initially requested. "The average rate requested would have resulted in a 6.8% increase, while the final rate implemented resulted in an average of a 5.4% increase," according to KFF. 

The Department of Heath & Human Services (HHS) collects data from states on all rate increases, even those below 10%. Based on this information, HHS says the estimated national average rate increase implemented in the individual market in 2011 is approximately 1.4% lower than the increase originally requested by insurers. In the small group market, the estimated rate increases implemented are approximately 0.8% lower than the rate originally requested.  

"Reviewing premiums should be based on actuarial science," Zirkelbach says. "We want to avoid the situation that is happening in some states where the review process has become politicized. Too often, the focus has been on premiums versus what's driving rise in premiums. We need to get out there and educate policy makers and the general public." 

To his point, in a September HHS press release, Secretary Kathleen Sebelius said PPACA is holding insurance companies accountable and saving billions of dollars for families across the country.  

All explanations of the final rate increases and the state or HHS's decisions are made available to the public on 

, which is intended to help consumers better understand their premiums and shop for health insurance. The site includes a "Why does my insurance company want to raise my premium?" section that is accessible after a consumer drills down to find his insurance company, plan and rate review information.  

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While most states have policies to evaluate premium increases, the Rate Review Program under the Patient Protection and Affordable Care Act (PPACA) puts a brighter spotlight on states' authority.

Rate review trims filings by $1 billion

Employers looking for ways to reduce healthcare costs are finding consumer-driven health plans (CDHP) to be attractive choices as they wait for the health insurance exchanges to go live. 

"We've seen double-digit growth since we launched our CDHP product line in 2003," says Marlo Murray, senior product manager for consumers and product lines at Health Care Service Corporation (HCSC). "Right now employers are considering a few different strategies, like moving to an exchange or moving to a full-replacement strategy."			

HCSC's CDHP program, BlueEdge, includes health savings account and health reimbursement account options. BlueEdge has 1.5 million members. 

Guy McGinnis, vice president of client analytics for HCSC, recently studied HCSC members who had been in a non-CDHP for at least a year and then migrated to a CDHP. The study analyzed the members' healthcare behavior and spending habits both before and after the switch.  

"We saw a reduction in emergency room utilization, while use of generic prescriptions went up, and wellness increased," McGinnis says. 

He found that members who have more responsibility for their healthcare costs were slightly more likely (4%) to take advantage of preventive services. Overall, McGinnis says the members he studied reduced combined medical and pharmacy spend by an aggregate 11%.  

RAND's data follows the same pattern. It found that families enrolling in a higher-deductible plan for the first time spent an average of 14% less in the first year than similar families in traditional plans. Cost savings were significant only for enrollees in plans with a deductible of at least $1,000 per person. 

RAND's study found a drop in preventive care occurred even though most preventive services are fully covered under consumer-directed plans.  

"CDHPs are more complex to setup and administer than other plans, but the benefits pay off," says Murray. "Certainly there is a need for infrastructure and transparency tools so members can understand the cost of procedures at one provider vs. another." 

Murray says employers also need to be educated to take a more holistic approach to CDHPs. 

Employers looking for ways to reduce healthcare costs are finding consumer-driven health plans (CDHP) to be attractive choices as they wait for the health insurance exchanges to go live.

Author | Jamie Gooch

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Rate review trims filings by $1 billion

Members change spending habits when engaged in their CDHPs