Double-digit insurance hikes to face review

(Story updated at 3:50 p.m. ET.)

Starting today, insurers that propose to increase their rates by 10% or more must submit their request to state or federal reviewers, who will determine if those hikes are reasonable, according to HHS.

As part of this process, independent experts will study information about underlying costs trends in healthcare and will indicate when insurance companies raise their costs unjustly. Consumers in every state will be able to view disclosure information that explains increases of 10% or more—compared with last year's rates—beginning in mid-September. And consumers will also be able to provide their own comments about the proposed increases.

“Thanks to the Affordable Care Act, consumers no longer have to navigate the health insurance market blindly and on their own,” Steve Larsen, director of the CMS' Center for Consumer Information and Insurance Oversight, said in a news release. “The next time your insurance company tries to raise your premium by double digits, it will have to give you and rate review experts a good reason—or be labeled as unjustified, or in some states denied.”

According to HHS, grant funding from the Patient Protection and Affordable Care Act helped Maryland reduce premium increases in 10 of the 22 rate filings approved during the third quarter of last year, while Rhode Island lowered a 20% increase to 10% just last month.

Larsen told reporters in a conference call that as a result of federal grant funding, 25 states have hired more staff for their rate-review processes; 33 states have increased their health IT capabilities for this purpose; and 31 states have improved their rate-filing requirements.

In a blog posting Thursday, America's Health Insurance Plans said the current approach to healthcare cost containment will not put the healthcare system on a sustainable path.

“Highly publicized provisions such as premium rate review make for good soundbites,” the posting read, “but literally do nothing to address the soaring cost of medical care. Premium costs are a reflection of the underlying cost of medical care in a local market,” it continued. “When the cost of medical care and benefits increases, a corresponding premium increase occurs.”