Massachusetts 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 Massachusetts 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 Massachusetts. The following is a general summary of how Massachusetts intends to use its funding:
- Expand the Scope of the Review Process: Currently, Massachusetts has prior approval authority over Blue Cross Blue Shield, HMOs and the small group market. The Commonwealth will expand filing requirements to the large group market.
- Improve the Review Process: Massachusetts will improve health insurance premium filings and review protocols by developing new analytic tools to evaluate rates. The filing requirements will be further refined and carriers must separate claims and administrative data into standardized buckets and develop new models to analyze rate data.
- Increase Transparency and Accessibility: At present, rate filings are available upon request after an internal review is completed. Massachusetts will modify its website to enhance product rate information displayed.
- Develop and Upgrade Technology: Massachusetts will develop new tools to improve efficiency and streamline reporting.
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.