Health and Human Services Secretary Kathleen Sebelius has announced grant awards of $46 million for 45 states and the District of Columbia to help improve the oversight of proposed health insurance premium increases.
The Affordable Care Act grants will also assist in taking action against insurers seeking unreasonable rate hikes and ensure consumers receive value for their premium dollars.
Officials say insurance companies in many states have increased health insurance premiums with little oversight, transparency or public accountability. Health insurance premiums have doubled on average during the last 10 years, much faster than wages and inflation, putting health coverage out of reach for millions of Americans and business owners.
Twenty-six states and the District of Columbia have the authority to reject a proposed increase that they feel is excessive, lacks justification or otherwise exceeds state standards. Many states that have the authority lack resources to exercise it meaningfully.
"The Affordable Care Act puts in place critical market reforms to improve quality and reduce the cost of healthcare for employers and individuals," Sebelius said. "Increased competition, lower insurance overhead and better risk pooling in health insurance exchanges in 2014 are expected to reduce premiums in the individual market by anywhere from 14-20 percent according to the Congressional Budget Office."
"Between now and then, we will continue to work with states to ensure consumers are receiving value for their premium dollars and to avoid the kind of double digit premium increases seen recently," she said.
The Affordable Care Act provides states with $250 million in Health Insurance Premium Review Grants over five years to help states review proposed health insurance premium increases. Applications for the first round of grants were made available on June 7.
"Rate review has worked here in Washington State – rates for some individual health plans in Washington increased by up to 40 percent until we stepped in to impose stiffer premium oversight," said Washington Gov. Chris Gregoire in a recent blog post. "The new resources provided through these grants will enhance our ability to crack down on unjustified rate hikes by insurance companies."
States have proposed to use this funding in a variety of ways:
- 15 states and the District of Columbia will pursue additional legislative authority to create a more robust program for reviewing or requiring advanced approval of proposed health insurance premium increases to ensure that they are reasonable;
- 21 states and the District of Columbia will expand the scope of their current health insurance review – for example, by reviewing and requiring pre-approval of rate increases for additional health insurance products.
- All 46 grantees will require insurance companies to report more extensive information through a new, standardized process to better evaluate proposed premium increases and increase transparency across the marketplace;
- 42 states and the District of Columbia will increase the transparency of the health insurance premium review process and provide easy-to-understand, consumer-friendly information to the public about changes to their premiums; and
- All state grantees will develop and upgrade existing technology to streamline data-sharing and put information in the hands of consumers more quickly.
"States will use these grant dollars in the way that makes the most sense for their insurance consumers," said Jay Angoff, director of the Office of Consumer Information and Insurance Oversight.
A chart summarizing how each state will use the new resources can be found here.