New York 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 New York 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 New York. The following is a general summary of how New York intends to use its funding:
- Expand the Scope of the Review Process: The grant program will be used to implement the new prior approval law passed in 2010. Under the new law all health insurance premiums will be subject to prior approval which includes adding large group review to the existing individual and small group review.
- Improve the Review Process: Effective 2010, all new forms and revised rates are subject to the prior approval of the Department. Health insurance premiums that are determined to be unreasonable, excessive, inadequate or unfairly discriminatory cannot be approved. New York will also standardize and streamline rate filings, develop a checklist for material to be submitted in connection with future rate filings, develop specifications for more detailed market segment reporting and develop a more standardized structure for reporting claims experience.
- Increase Transparency and Accessibility: Currently New York only posts health insurance premium rates on its website. New York plans to update its website to provide general information on the rate filing process in addition to providing a public forum in which consumers can comment on rate increases.
- Develop and Upgrade Technology: New York will modify its existing systems and expand its data management and internal database to capture newly generated data and increase reporting functionality 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.