Montana 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 Montana 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 Montana. The following is a general summary of how Montana intends to use its funding:
- Pursue Additional Legislative Authority: Currently, the Commissioner of Securities and Insurance (CSI) has limited authority to review health insurance premium increases. The Commissioner intends to draft a bill to present to the legislature in 2011 that will grant the CSI review and approval authority over major medical health insurance rates.
- Expand the Scope of the Review Process: Currently, individual market carriers are not required to file health insurance premiums. Small group market carriers must file actuarial certification that rating rules are in compliance with Montana law. The State will seek to obtain authority to require all major medical health insurance rates to be filed, reviewed and approved in all markets.
- Improve the Review Process: Montana does not have any legal authority requiring major medical rates to be filed with or reviewed by CSI. The proposed rate filing law will provide review and approval authority and enable CSI to enforce all rating protections that exist in the Affordable Care Act. If Montana is not granted additional authority by the legislature, grant funds will be used to improve enforcement of its existing rating laws and new Federal laws; expand targeted market conduct examinations and complete more in-depth analysis of small group actuarial certifications; develop rating manuals; and enhance consumer protections.
- Increase Transparency and Accessibility: The proposed legislation will provide for a consumer comment period and permit consumers to request public hearings. CSI will also provide detailed health insurance premium information, such as health insurance premium increase requests and rating trends, in a consumer-friendly format on its website.
- Develop and Upgrade Technology: Montana will collect additional filing data and establish a data center to compile and publish fee schedule 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.