HHS Steps Up Efforts to Curb Health Insurance Premium Hikes

The Department of Health and Human Services finalized regulations Thursday that will require insurance companies to disclose and justify rate increases above 10 percent.

Public outcry has been growing over premium hikes, most visibly in California, where Blue Shield of California announced it would raise health insurance rates for some individuals as much as 59 percent in January. Three months later, Blue Shield backed away from the hike after the backlash.

The HHS rules, previously slated to begin July 1, will now take effect September 1:

>”Starting September 1, 2011, the rule requires independent experts to scrutinize any proposed increase of 10-percent for most individual and small group health insurance plans. States will have the primary responsibility for reviewing rate increases. While most states will take on this responsibility, HHS will serve in a backup role in states that don’t have the resources or authority to review rates. HHS has awarded $44 million in Affordable Care Act grants to states to help strengthen their oversight capabilities. An additional $200 million will continue to be available to states under the Act.

The rule requires insurance companies to provide consumers with easy to understand information about the reasons for unreasonable rate increases and post the justification for those hikes on their website as well as on the HHS Affordable Care Act website, www.healthcare.gov.”

The 10 percent threshold has been criticized as arbitrary by insurers. But Steve Larsen, the director of HHS’ Center for Consumer Information and Insurance Oversight, said the department was “very comfortable that at this point the 10 percent is a reasonable threshold and the right number.”

Department officials were careful to point out a 10 percent increase only triggers disclosure requirements. It is not automatically considered unreasonable — and the department will transition to state-by-state standards next year.

Thursday’s announcement comes on the heels of a New York Times report saying that insurance companies are raking in record profits, while many Americans are choosing to postpone medical care.

For someone like Shannon Hardin of California, whose hours at a grocery store have been erratic, there is simply no spare cash to see the doctor when she isn’t feeling well or to get the $350 dental crowns she has been putting off since last year. Even with insurance, she said, “I can’t afford to use it.” Delaying care could keep utilization rates for insurers low through the rest of the year, according to Charles Boorady, an analyst for Credit Suisse. “The big question is whether it is going to stay weak or bounce back,” he said. “Nobody knows.”

The cost of health care will rise again next year — and more employers will ask their workers to help absorb that cost by paying higher deductibles, according to a new survey by PricewaterhouseCoopers (PwC).

From Kaiser Health News and The Fiscal Times:

Employees will be experiencing higher co-pays and deductibles in their health insurance next year as employers continue to reduce their overall coverage to deal with rapidly rising costs. A new survey of 1,700 firms in 30 industries from PwC (PriceWaterhouseCoopers) released Wednesday showed that this year’s health care claims are running slightly ahead of a year ago.

Reaction from advocacy and industry groups was swift.

In a statement, Ethan Rome, executive director of Health Care for America Now said “The days of insurance companies running roughshod over consumers and jacking up our rates whenever they want are over.” He added the new rule was a “a key step toward finally ending the insurance companies’ stranglehold on our health care.”

But insurance industry groups countered the new rules ignore “medical cost drivers.” Karen Ignagni, President of America’s Health Insurance Plans, said they won’t make health care coverage more affordable for families and employers. She said “the public policy discussion needs to be enlarged to focus on the soaring cost of medical care that threatens our economic competitiveness, our public safety net, and the affordability of health care coverage.”

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