Insurers face off with state regulators

February 1, 2011

Insurers must disclose new rates and justify increases that exceed certain thresholds

WASHINGTON-Government leaders are set to block double-digit premium hikes, forcing insurers to contend with rising costs and flat revenues. Under the Patient Protection and Affordable Care Act (PPACA), insurers must disclose new rates and justify increases that exceed certain thresholds.

Other California insurers are seeking higher premiums, too. Anthem Blue Cross is seeking a 9.8% average increase-just below the 10% threshold considered "unreasonable" in new regulations proposed late last year by the Department of Health and Human Services (HHS). Following the outrage last year over Anthem's rates, the company appears anxious to keep premium changes out of the spotlight.

State insurance regulators-not the federal government-retain authority for rejecting rates deemed unreasonable, but public disclosure of rate review information, according to HHS Secretary Kathleen Sebelius, will "rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for so many families."

Rhode Island Insurance Commissioner Chris Koller agrees that insurance rate review will remain "essentially a state-based activity," and that the new program will provide "a backstop behind states" trying to tackle insurance rate hikes. A main benefit of the program, according to Koller, is that it offers a system for insurance commissioners to examine and question the assumptions underlying how a rate will affect enrollment demographics and other calculations used by insurers to set rates.

Karen Ignagni, president of America's Health Insurance Plans (AHIP), agrees that states are best suited to review premiums because of their knowledge of the local market and its affect on plan solvency.