Starting Sept. 1, federal or state regulators will scrutinize any proposed health insurance rate increase of 10 percent or more, and require health insurance companies to publicly justify the rate hikes.
Forty-one states will conduct their own rate reviews, and federal officials will do the reviews in nine states, which lack the authority to adequately review rates.
The Centers for Medicare and Medicaid Services will review rates in both the individual and small-group markets in Alabama, Arizona, Idaho, Louisiana, Missouri, Montana and Wyoming, and will review rates for small groups in Pennsylvania and Virginia.
The new rules, combined with grants for states to strengthen their rate review processes, will increase scrutiny on health insurance rates, according to Consumers Union.
"But ultimately, it will be up to the states to protect consumers when rate increases are found to be unreasonable," DeAnn Friedholm, Consumer Union's health reform campaign director, said in a press statement. "States need to make sure they have the tools necessary to prevent unreasonable rate increases from going into effect. And some states that have the authority to curb rate hikes need to act more aggressively to prevent insurers from gouging consumers."
Under the Affordable Care Act, the authority to deny or change proposed rate increases remains with the states, but not all states have passed laws allowing regulators to prevent unreasonable rate increases from going into effect.
Consumers Union developed a state model rate review law for individual health insurance plans and is encouraging states to adopt reforms to increase oversight and insurance company accountability.