Alabama is Cracking Down on Unreasonable Health Insurance Premium Hikes
For too long, insurance companies in many States have increased health insurance premiums with little oversight, transparency, or public accountability. Some States have both the authority and the capacity to review insurers’ proposed health insurance premium increases. Just 26 States and the District of Columbia have the authority to reject a proposed increase that is excessive, lacks justification or exceeds certain standards. Many do not, and some who have the authority lack the right tools to exercise that authority to reject excessive premium increases. This lack of authority and resources for States has unfortunately contributed to unjustified premium increases. Health insurance premiums have doubled on average over the last 10 years, much faster than wages and inflation, putting coverage out of reach for millions of Americans and business owners.
The Affordable Care Act provides States with $250 million in Health Insurance Premium Review Grants over five years to help states like Alabama help transform the way they review proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.
On August 16, the Department of Health and Human Services announced the award of $46 million in the first round of these grants, including $1 million for Alabama. The following is a general summary of how Alabama intends to use its funding:
- Pursue Additional Legislative Authority: Currently, Alabama’s Department of Insurance has very limited health insurance premium authority - restricted to reviewing premiums proposed by Blue Cross Blue Shield and HMOs. The Department of Insurance will introduce legislation during the 2011 session that seeks the authority to review and approve health insurance premiums in the individual and small group market.
- Expand the Scope of the Review Process: Alabama will expand the scope of its health insurance premium review to include additional health insurance companies and new lines of business.
- Improve the Review Process: Alabama plans significant improvements to its limited review authority. The State proposes to develop a new review unit in the Department of Insurance. Alabama also intends to develop and implement new regulations and establish a standardized filing and review process.
- Increase Transparency and Accessibility: Alabama is currently limited in the information it is allowed to publish. The State will seek legislative authority to post consumer-friendly summaries of health insurance premium reviews, develop toolkits for consumers and conduct town hall meetings for consumer education.
- Develop and Upgrade Technology: Alabama will upgrade its existing systems to assist in reviewing health insurance premiums and publicly disclosing this information.
The Health Insurance Premium Review Grants are one element of a broad effort under the Affordable Care Act to reduce the unsustainable rates of increase proposed by some insurers today. Additional resources from this $250 million program for rate review will be available in subsequent years to further strengthen State health insurance premium review procedures.