Vermont 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 Vermont 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 Vermont. The following is a general summary of how Vermont intends to use its funding:
- Expand the Scope of the Review Process: Vermont already requires prior review and approval of health insurance premiums for some types of plans, and intends to include large group insurance plans as well as other insurance plans such as student coverage in that process.
- Improve the Review Process: Currently Vermont conducts prospective actuarial review on all filings. The filings of the largest insurers are referred to an actuarial contractor for a second level review. With grant funding the State will develop standards for expanding its review process and for improving data collection and analysis.
- Increase Transparency and Accessibility: Presently, Vermont provides hard copies of health insurance premium filings upon request, which must be picked up in person. Grant funds will be used to post plain language summaries on the State’s existing web site and add comment functionality for consumers.
- Develop and Upgrade Technology: Vermont will collect and integrate historical rate filing data with current filed data and providing claims reporting by provider.
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.