Health Plans Must Justify Double-Digit Rate Hikes

A new rule, which stems from the 2010 health-care overhaul, states that any rate hikes of 10 percent or more must be reviewed by regulators. An association representing health plans says that focusing on premiums rather than the factors that drive medical costs won't benefit consumers.

The Department of Health and Human Services (HHS) on Thursday released finalized rules that it says will help reduce insurance costs by reviewing and moderating premium increases among health insurance plans.

Beginning September 1, any rate hikes of 10 percent or more must be reviewed by state or federal regulators. The rule, which stems from President Barack Obama's 2010 health-care overhaul, prompted criticism from America's Health Insurance Plans (AHIP), a health insurance industry lobbying group that reportedly pushed to block the rule and represented major insurers, including Minnetonka-based UnitedHealth Group, Inc.

The HHS claims that the new rules will give consumers access to more and clearer information about rate increases, as insurers will be required to post information justifying their rate increases on their own Web sites and on an HHS Web site.

The HHS has given states $44 million in grants under the Affordable Care Act to bolster their abilities to review and oversee proposed rate hikes. It will make available another $200 million to states in the future.

States will work with the HHS to determine what threshold is appropriate to necessitate a rate-hike review in each one. In September 2012, those new thresholds will replace the 10-percent rule that takes effect this September.

“Effective rate review works-it does so by protecting consumers from unreasonable rate increases and bringing needed transparency to the marketplace,” HHS Secretary Kathleen Sebelius said in a statement. “During the past year, we have worked closely with states to strengthen their ability to review, revise, or reject unreasonable rate hikes.”

Karen Ignagni, president and CEO of AHIP-a national association that represents 1,300 health plan members-disagrees: “Focusing on health insurance premiums while ignoring underlying medical cost drivers will not make health-care coverage more affordable for families and employers,” she said in a statement. “The public policy discussion needs to be enlarged to focus on the soaring cost of medical care that threatens our economic competitiveness, our public safety net, and the affordability of health care coverage.”

Ignagni also said that health plans have already teamed with providers in an effort to restrain growing costs.

An AHIP spokesman declined to comment on what companies the organization represents, and which ones opposed the new rate-hike review rules. A report by Bloomberg indicates that UnitedHealth and Indianapolis-based WellPoint, Inc., were among those that tried to get regulators to change the rules. A Friday call to UnitedHealth was not immediately returned.