Health Insurance Quotes
Does your state even care what you pay for health insurance?
After watching health insurance rates balloon in the last several years, you might wonder who has the consumer's back.
States are largely responsible for overseeing how much health insurance companies charge for coverage, but they're all over the map in terms of how hard they scrutinize proposed premiums.
Some states did comprehensive rate reviews last year, while others took only a cursory look at rate filings, according to a new report by the U.S. Government Accountability Office (GAO). Some states rejected many of the proposed hikes. Others, lacking the authority to even disapprove rates, let all premium increases go through.
More than three-quarters of U.S. consumers who purchased their own insurance faced premium hikes last year, with the average increase hitting 20 percent, according to a Kaiser Family Foundation survey. Premiums for employer-sponsored coverage have more than doubled in the last 10 years, another Kaiser survey says.
Consumer advocates say strong rate regulation is essential for health care reform to work, especially considering that the Affordable Care Act will require almost everyone to purchase health insurance in 2014 and the government will provide subsidies for low-income people.
"If some of the reforms bring down health care costs [as they're intended to do], we need rate regulation to make sure savings are passed on to consumers," says Anthony Wright, executive director of Health Access California, a statewide consumer advocacy group.
The Affordable Care Act included $250 million for states to beef up their rate-review procedures. So far the U.S. Department of Health and Human Services has awarded $46 million of that money in grants to 45 states and the District of Columbia.
As of Sept. 1, insurers that request double-digit rate increases must submit the request to state or federal reviewers. Federal reviews will take place in cases where states lack the authority or resources to review rates.
The GAO report surveyed state officials for how they handled rate reviews in 2010 and how they're using the grants to strengthen oversight. Insurance regulators from every state and the District of Columbia responded, except for the Indiana Department of Insurance.
Among the findings:
• Some states didn't review all health insurance rates.
Twenty states reviewed less than 95 percent of rate filings last year. Some states did not review rate filings in small- or large-group markets, and Illinois and Louisiana, which lack authority to approve rates before they go into effect, did not review any rate filings last year.
• Some states lacked authority to disapprove rates.
Twenty-eight states had "prior approval" authority, which means regulators could approve, reject or modify the insurers' rate requests. But not all of them had the power for all types of health insurance. Some states had the authority only for policies individuals buy, for instance, but not for policies that small and large groups purchase.
• Few states rejected a large portion of proposed rate increases.
Five states reported more than half of their reviews resulted in lower rates than insurance companies originally proposed: Connecticut, Iowa, New York, North Dakota and Utah.
Thirteen states said less than 10 percent of their rate reviews led to lower rates – California, Florida, Georgia, Hawaii, Kentucky, Maine, Michigan, New Jersey, Nevada, North Carolina, South Carolina, Texas and Washington.
Regulators from six states -- Arizona, Idaho, Missouri, Nebraska, Wisconsin, and Wyoming -- reported none of their reviews resulted in lower rates, and respondents from six other jurisdications – the District of Columbia, Mississippi, Montana, Oklahoma, Rhode Island, and Virginia -- did not respond to the question or did not have the information available to answer it.
• Most states didn't include consumers in the process.
Only 14 states gave consumers a chance to participate in rate-review hearings, public comment periods or on advisory boards. They were California, Connecticut, Iowa, Maine, Michigan, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Washington, West Virginia and Wisconsin.
Oregon used some of its federal grant money to contract with a consumer advocacy group, the Oregon State Public Interest Research Group Foundation (OSPIRG), to analyze proposed rates.
"We're not going to have the same resources as the insurance companies, but the grant has been a really significant help in devoting resources to doing analysis and getting more people involved in the process, says Laura Etherton, OSPIRG Foundation Health Care Advocate.
In July, the Oregon Department of Consumer and Business Services agreed with the group's critical analysis of a proposed 22.1 percent rate hike by Regence Blue Cross Blue Shield on individual plans and cut the hike to 12.8 percent, saving consumers $12.5 million.
• States are taking steps to get tougher.
Most of the states that received grants took steps last year to strengthen their oversight. About half said they were evaluating or developing new rate review processes. Over two-thirds said they had hired more staff, contracted with actuaries or improved technology to bolster rate review. And more than a third introduced or passed legislation to give regulators more authority over premium hikes.
California Insurance Commissioner Dave Jones, for instance, is pushing for legislation that would give his department the authority to reject unreasonable premium increases. The bill passed in the Assembly and is now pending in the state Senate.
California's rate review has led some insurance carriers to agree to lower premium hike requests, Wright says. "But in some cases insurers have said ‘no.’"
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