State Approval of Health Insurance Rate Increases
Updated: February 17, 2012
When health insurance companies announce rate hikes, most states have laws that require some steps to be taken before the new rates take effect for state-regulated health policies. Over the past 25 years, about two dozen states gave the state insurance department or commission the legal power of prior approval, or disapproval, of certain types of rate changes.
The statutes typically grant authority similar to Connecticut's example: "The commissioner may refuse such approval if he finds such amounts to be excessive, inadequate or discriminatory." Some require the use of "actuarial principles." However, most of these laws do not specify dollar amounts or percentage changes.
Federal Health Reform
The Patient Protection and Affordable Care Act (ACA) establishes a process for reviewing certain increases in health plan premiums and requires plans to justify such increases. The law requires states to report on trends in premium increases and recommend whether certain plans should be excluded from health benefit exchanges beginning in 2014, based on unjustified premium increases. Some of the key provisions took effect immediately, beginning with the 2010 plan year. (Title I, Subtitle A, Sec. 1003) Generally the federal provisions do not preempt state laws and regulations that provide more extensive scrutiny or powers to disapprove proposed rate increases. Details are provided within the three 50-state tables published below.
-
$250 million in grant funding is available to states over a five-year period to help with rate review activities. (Effective during the 2010 plan year.)
-
Health Secretary Sebelius sent a letter on June 7, 2010, to states, announcing the availability of $51 million in Health Insurance Premium Review Grants through the Affordable Care Act.
"These funds will help states strengthen their oversight capabilities and will allow states that do not currently review rates to establish a program. In doing so, these grants will help states protect consumers and small employers by holding insurers accountable for unreasonable insurance rate increases that have made coverage unaffordable for many American families."
States with Effective Rate Review Programs
On September 1, 2011, HHS announced the nationwide implementation of state-based programs to conduct rate review. HHS worked with states to strengthen or alter their programs. As detailed in the rate review regulation finalized on May 19, 2011, states with effective rate review systems must conduct reviews of proposed rates above the applicable threshold (10% from September 2011-August 2012), but if a state lacks the resources or authority to conduct the required rate reviews, HHS will conduct them.
An effective rate review system, as described by HHS:
- Must receive sufficient data and documentation concerning rate increases to conduct an examination of the reasonableness of the proposed increases.
- Must consider the factors below as they apply to the review:
- Medical cost trend changes by major service categories
- Changes in utilization of services (i.e., hospital care, pharmaceuticals, doctors’ office visits) by major service categories
- Cost-sharing changes by major service categories
- Changes in benefits
- Changes in enrollee risk profile
- Impact of over- or under-estimate of medical trend in previous years on the current rate
- Reserve needs
- Administrative costs related to programs that improve health care quality
- Other administrative costs
- Applicable taxes and licensing or regulatory fees
- Medical loss ratio; and
- The issuer’s capital and surplus.
- Must make a determination of the reasonableness of the rate increase under a standard set forth in state statute or regulation.
- Must post either rate filings under review or preliminary justifications on their websites or post a link to the preliminary justifications that appear on the CMS website.
- Must provide a mechanism for receiving public comments on proposed rate increases.
- Must report results of rate reviews to CMS for rate increases subject to review.
To determine whether a state met these standards, HHS reviewed all available documentation, and met with state regulators and their staff to verify the information and obtain any updates. CMS will continue to accept information from states and monitor states in order to ensure correct classification. CMS can reevaluate the status of this list as changes are made in each state.
As of February 16, 2012:
- 44 states, the District of Columbia and three U.S. territories have effective rate review in at least one insurance market;
- 42 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands have effective review for all insurance markets and issuers.
- In two states (PA*, VA) the Federal government will partner with the state to conduct reviews; and
- The Federal government will conduct review in six states (AL, AZ, LA, MO, MT, WY) and two U.S. territories (American Samoa, Northern Marianas Islands) until those areas are able to strengthen their review processes and authorities.
- Resources and assistance are available to states and territories to help strengthen their review processes.
-
Starting September 1, 2011, insurers seeking rate increases of 10 percent or more for non-grandfathered plans in the individual and small group markets are required to publicly disclose the proposed increases and the justification for them. Such increases will be reviewed by state or Federal independent experts to determine whether they are unreasonable. In future years, the threshold for review will be set on a state-by-state basis using data that reflect insurance and health cost trends in each state. And an easy-to-access, consumer-friendly disclosure form explaining the proposed increases will also be made publicly available through HHS, state and/or insurer websites.
The rate review regulations work in conjunction with other parts of the Affordable Care Act that will also hold premiums down. The law requires insurers to spend at least 80 percent of premium dollars on direct medical care or to improve the quality of care instead of on overhead, advertising, and executive salaries and bonuses. If an insurer fails to meet that test, they must pay a rebate to their enrollees. This “medical loss ratio” regulation, released on November 22, 2010, makes the health insurance marketplace more transparent and increases the value consumers receive for their money.
-
Starting mid-September 2011, consumers in every state can go to HealthCare.gov to view easy-to-access, consumer-friendly disclosure information explaining proposed increases that are 10 percent or higher than last year’s rates. Consumers will see a summary of the key factors driving rate increases and an explanation provided by insurance companies for why the proposed increase is needed; Consumers also will also be given the ability to comment on large proposed rate increases.
List of Federally Approved "Effective" State Rate Review Programs, as of February 16, 2012.
The list below indicates whether Federal or state process will be used to review proposed insurance rate increases. The data and definitions were published by HHS as of 2/16/2012.
|
STATE
|
Individual Market |
Small Group Market |
Effective Rate
Review Program
|
|
Alabama
|
Federal
|
Federal
|
No
|
|
Alaska*
|
State
|
State
|
Yes
|
|
Arizona
|
Federal
|
Federal
|
No
|
|
Arkansas
|
State
|
State
|
Yes
|
|
California
|
State
|
State
|
Yes
|
|
Colorado
|
State
|
State
|
Yes
|
|
Connecticut
|
State
|
State
|
Yes
|
|
Delaware
|
State
|
State
|
Yes
|
|
Florida
|
State
|
State
|
Yes
|
|
Georgia
|
State
|
State
|
Yes
|
|
Hawaii*
|
State
|
State
|
Yes
|
|
Idaho*
|
State
|
State
|
Yes
|
|
Illinois
|
State
|
State
|
Yes
|
|
Indiana
|
State
|
State
|
Yes
|
|
Iowa*
|
State
|
State
|
Yes
|
|
Kansas
|
State
|
State
|
Yes
|
|
Kentucky
|
State
|
State
|
Yes
|
|
Louisiana
|
Federal
|
Federal
|
No
|
|
Maine
|
State
|
State
|
Yes
|
|
Maryland
|
State
|
State
|
Yes
|
|
Massachusetts
|
State
|
State
|
Yes
|
|
Michigan
|
State
|
State
|
Yes
|
|
Minnesota
|
State
|
State
|
Yes
|
|
Mississippi
|
State
|
State
|
Yes
|
|
Missouri
|
Federal
|
Federal
|
No
|
|
Montana
|
Federal
|
Federal
|
No
|
|
Nebraska
|
State
|
State
|
Yes
|
|
Nevada
|
State
|
State
|
Yes
|
|
New Hampshire
|
State
|
State
|
Yes
|
|
New Jersey
|
State
|
State
|
Yes
|
|
New Mexico
|
State
|
State
|
Yes
|
|
New York
|
State
|
State
|
Yes
|
|
North Carolina
|
State
|
State
|
Yes
|
|
North Dakota
|
State
|
State
|
Yes
|
|
Ohio
|
State
|
State
|
Yes
|
|
Oklahoma
|
State
|
State
|
Yes
|
|
Oregon
|
State
|
State
|
Yes
|
|
Pennsylvania*
|
State
|
State
|
Yes
|
|
Rhode Island
|
State
|
State
|
Yes
|
|
South Carolina
|
State
|
State
|
Yes
|
|
South Dakota
|
State
|
State
|
Yes
|
|
Tennessee
|
State
|
State
|
Yes
|
|
Texas
|
State
|
State
|
Yes
|
|
Utah
|
State
|
State
|
Yes
|
|
Vermont
|
State
|
State
|
Yes
|
|
Virginia
|
State
|
Federal
|
Partial
|
|
Washington
|
State
|
State
|
Yes
|
|
West Virginia
|
State
|
State
|
Yes
|
|
Wisconsin
|
State
|
State
|
Yes
|
|
Wyoming
|
Federal
|
Federal
|
No
|
|
District / Territories
|
|
|
|
District of Columbia
|
State (District) |
State (District) |
Yes |
|
American Samoa
|
Federal
|
Federal
|
No
|
|
Guam*
|
State
|
State
|
Yes
|
|
Northern Marianas Islands
|
Federal
|
Federal
|
No
|
|
Puerto Rico*
|
State
|
State
|
Yes
|
|
Virgin Islands
|
State (Territory)
|
State (Territory)
|
Yes
|
*Notes:
- Pennsylvania will have effective rate review authority for the non-association commercial small group market effective March 21, 2012 per newly enacted legislation (Act 134 (renumbered) of 2011). Until that date, CMS will review Pennsylvania non-association commercial small group products while the State will continue to review rates for all other non-association products.As for the association rates, effective March 21, 2012, Pennsylvania will begin reviewing rates for small group associations sitused in Pennsylvania along with the rates for individual associations sitused in the State that it is already reviewing. CMS will continue to review the rates for individual and small group associations that are not sitused in Pennsylvania.
- Alaska will have effective rate review authority in all markets on January 1, 2012 per state statute. Until that date, CMS will review Alaskan commercial plans and the state will review Blue Cross Blue Shield plans.
- Following the release of August 15, 2011 Bulletin 11-06 from the Iowa Insurance Division, Iowa now has effective rate review in both the individual and small group market.
- Following August 22, 2011 correspondence from the Idaho Department of Insurance confirming its intent to comply with the rate review regulation (45 CFR Part 145), Idaho now has effective rate review in both the individual and small group market.
- Based on information received from the Guam Department of Insurance, Guam now has effective rate review in both the individual and small group markets.
- Following issuance of July, 2011 Ruling Letter from the Puerto Rico Department of Insurance, Puerto Rico now has effective rate review in both the individual and small group markets.
- As of November 2011, Hawaii is reviewing all rates for association plans sitused in Hawaii.
News and Articles of Interest
-
Federal Regulatory Guidance and Actions: Health Insurance Premium Review - NCSL summary, 6/24/10.
-
Inconsistencies mar states' insurance rate reviews- Reuters, 12/2/10.
-
Rate Review: Spotlight on State Efforts to Make Health Insurance More Affordable- Kaiser Family Foundation Report, 12/10.
-
NCSL States Implement Health Reform: Premium Rate Review- 12/13/10.
-
Shining a Light on Health Insurance Rate Increases: Rate Review Fact Sheet- Healthcare.org, 12/21/10.
-
States Can Apply for Nearly $200 Million to Help Fight Health Insurance Premium Increases- US Department of Health and Human Services, 2/24/11.
-
Affordable Care Act Helps Fight Unreasonable Health Insurance Premium Increases- US Department of Health and Human Services, 5/19/11.
-
Private Health Insurance: State Oversight of Premium Rates- Government Accountability Office, 7/11.
"This report describes (1) states’ practices for overseeing health insurance premium rates in 2010, including the outcomes of premium rate reviews; and (2) changes that states that
received HHS rate review grants have begun making to enhance their oversight of health insurance premium rates."
-
"Bill to regulate California health insurance rates is shelved." - Assemblyman Mike Feuer doesn't have enough votes in the California Senate to pass a rate-regulation bill that health insurance companies, healthcare providers and others fought. LA Times 9/1/2011.
-
Individual and Small-Group Market Health Insurance Rate Review and Disclosure: State and Federal Roles After PPACA - Issue brief by George Washington, 9/28/11
-
New Mexico Amplifies Consumer Voices in Rate Review Process - Health Action New Mexico, in partnership with other groups, quickly launched a petition campaign against an unnecessary rate increase, which led the Department of Insurance to deny Blue Cross Blue Shield’s request for a rate increase. More... Posted by Families USA, 10/31/11
-
HHS cites insurer's premium hike as 'excessive' - HHS for the first time invokes the insurance rate-review provision of the healthcare reform law, saying a 12% premium hike by Pennsylvania insurer Everence is "excessive." Modern Healthcare, 11/21/11.
-
Health insurance rate hikes in nine states deemed excessive by HHS - Secretary Sebelius calls on insurance companies to drop unreasonable rate hikes. HHS, 3/22/2012
According to the Department of Health and Human Services regulations....
- In 2011, all insurers seeking rate increases of 10 percent or more in the individual and small group market publicly disclose the proposed increases and the justification for them. Such increases are not presumed unreasonable, but will be analyzed to determine whether they are unreasonable.
- After 2011, a state-specific threshold will be set for disclosure of rate increases, using data and trends that better reflect cost trends particular to that state.
- Under the proposed regulation, states with effective rate review systems would conduct the reviews. If a state lacks the resources or authority to do thorough actuarial reviews, HHS would conduct them. Meanwhile, HHS will continue to make resources available to states to strengthen their rate review processes.
2011 Premium Rate Review Laws and Legislation
Twenty-one states addressed premium rate review changes during the 2011 session. Those states include Arkansas, California, Connecticut, Hawaii, Iowa, Illinois, Kansas, Maine, Massachusetts, Montana, North Dakota, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Utah, Vermont, Washington and West Virginia. As of July 21, 2011, nine states-Hawaii, Maine, North Dakota, New Mexico, New York, Tennessee, Utah, Vermont and Washington- passed laws to address rate review. For more information about the legislation still pending see NCSL's Health Reform Database.
|
State
|
Existing Rate Filing Requirement (Dec. 2010)
|
2011 Bill Number
|
Sponsor
|
2011 Bill Status, Location and Summary
|
|
Alabama
|
Individual, Small and Large- Informational
|
|
|
|
|
Alaska
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
Arizona
|
Individual- Informational;
Small and Large- No Requirement
|
|
|
|
|
Arkansas
|
Individual- Informational; Small and Large- No Requirement
|
AR H 2104
|
Woods (R)
|
Failed - Adjourned - House Public Health, Welfare and Labor Committee
Would authorize the Insurance Commissioner to enforce the Affordable Care Act, including to approve premium rates for individually underwritten insurance policies and health coverage contracts, to approve a schedule of premium rates or the methodology for determining premium rates for group insurance policies.
|
|
AR H 2138
|
Hyde (D)
|
Failed - Adjourned – Withdrawn
Would establish the Arkansas Health Benefits Exchange, establishing a Small Business Health Options Program, requiring insurance companies, hospital and medical service corporations, HMOs, and small employer carriers to file health premium rate tables with the Insurance Commissioner, repealing provisions concerning disapproval of individual health insurance rates and entitlement to a conversion policy upon termination of a group policy. Bill withdrawn by author.
|
|
California
|
Individual, Small and Large- File and Use
|
CA A 52
|
Feuer (D)
|
Pending - Senate Appropriations Committee
Would require notification by insurers before changing premium rates or coverage in a health care plan as well as approval from the Department of Managed Health Care and the Department of Insurance for increases in health care premiums, copayments, or deductibles.
Article: "Bill to regulate California health insurance rates is shelved." 9/1/11
|
|
Colorado
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
Connecticut
|
Individual, Small and Large- Prior Authorization
|
CT S 15
|
Crisco (D)
|
Failed – Died
Would enhance state rate review and rate approvals for long-term care insurance policies, requiring transparency and public comment at a symposium prior to any rate approval decision for such proposed premium increases.
|
|
CT H 5170
|
O-Brien (D)
|
Failed – Died
Would expand state rate review and reduce the amount of permissible increases for health insurance premiums, ensure that health insurance premium payments are used for health care services, also would prohibit the use of health insurance policy premiums collected from residents for political activities by the insurer.
|
|
CT H 5243
|
Zalaski (D)
|
Failed – Died
Would require advance notice of health insurance premium rate increases, with health insurers to provide at least sixty days' advance notice to affected policyholders of an increase in their premium rates.
|
|
Delaware
|
Individual, Small and Large- File and Use
|
|
|
|
|
District of Columbia
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
Florida
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
Georgia
|
Individual, Small and Large- Informational
|
|
|
|
|
Hawaii
|
Individual, Small and Large- Prior Authorization
|
HI S 1273
|
Tsutsui (D)
|
Enacted - Act No. 15
Authorizes the state Insurance Commissioner to enforce the consumer protections and market reforms relating to health insurance, including HMOs, mutual and fraternal benefit societies, as set forth in the Affordable Care Act—including rate review.
|
|
Idaho
|
Individual- File and Use; Small and Large- No Requirement
|
|
|
|
|
Illinois
|
Individual- With Form; Small and Large- No Requirement
|
IL H 289
|
Flowers (D)
|
Pending - House Rules Committee
Would create the independent quasi-judicial Health Insurance Rate Review Board to ensure insurance rates are reasonable and justified. A panel would provide a list of nominees for appointment to the Board.
|
|
IL H 1501
|
Harris (D)
|
Pending - House Rules Committee
Would provide for the filing of premium rates with respect to health insurance coverage offered by an issuer and premium rate changes, also would require a company to notify the Director of Insurance whenever a policy form has been closed for sale, with provisions concerning health insurance premium rates and prior approval of the Director.
|
|
Indiana
|
Individual- Prior Authorization; Small and Large- File and Use
|
|
|
|
|
Iowa
|
Individual, Small and Large- Prior Authorization
|
IA S 20
|
Kibbie (D)
|
Pending - Carryover - Senate Commerce Committee
Would expand state health insurance rate review and rate increase requirements, including notice, public comment and hearing requirements, would require health insurance carriers to notify all policyholders and the public.
|
|
IA HSB 125
|
Commerce Committee
|
Pending - Carryover – HOUSE
Would authorize the Insurance Commissioner to adopt administrative rules to implement the insurance provisions of the Affordable Care Act, would require public posting of all comments regarding premium rate review "if the increase exceeds the average annual health spending growth rate."
|
|
Kansas
|
Individual, Small and Large- File and Use
|
KS H 2208
|
Insurance Committee
|
Pending - Carryover - House Insurance Committee
Would require any health insurer desiring to change rates on any policy form, contract, or certificate to submit electronically a rate filing request for approval with the Commissioner. No rate or change to a rate shall be used unless approved by the Commissioner, including special provisions for the Individual Market Health Insurance Rate Review Act.
|
|
KS H 2383
|
Appropriations Committee
|
Pending - Carryover - Senate Ways and Means Committee
Appropriations bill, concerning spending for fiscal years 2011 through 2016. Would authorize state spending of federal grant funds without limit, related to implement the federal Affordable care act including the HHS rate review grant.
|
|
Kentucky
|
Individual, Small and Large- File and Use
|
|
|
|
|
Louisiana
|
Individual, Small and Large- File and Use
|
|
|
|
|
Maine
|
Individual and Small- Prior Authorization; Large- ?
|
ME H 877
|
Goode (D)
|
Pending - Carryover - Joint Committee on Insurance and Financial Services
Makes the rate review process for small group health insurance rates the same as the process for individual health insurance. Part A requires that, if a filing proposes an increase in rates in a small group health plan, the Superintendent of Insurance shall hold a hearing on the proposed rate increase at the request of the Attorney General. Part A makes it clear that in any hearings the burden of proving proposed rates are not excessive, inadequate or unfairly discriminatory is on the insurer.
|
|
ME H 1140
|
Richardson W (R)
|
Enacted - Public Law No. 2011-364
Amends the state health insurance laws to incorporate changes to implement the requirements of the federal Affordable Care Act adopted in 2010—including rate review.
|
|
Maryland
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
Massachusetts
|
Individual- Prior Authorization; Small and Large- No Requirement (Act. Cert.)
|
MA S 444
|
Moore M (D)
|
Pending - Joint Committee on Financial Services
Would provide that if the aggregate medical loss ratio (MLR) for all plans offered under chapter 288 Sec. 29, is less than 88%, such carrier's rate "shall be presumptively disapproved as excessive by the Commissioner," also would provide for calculations for certain refunds from out of compliance insurers.
|
|
MA H 1181
|
Costello (D)
|
Pending - Joint Committee on Health Care Financing
Would require continued reporting of premium rate review information by most health insurance companies, while exempting entities (such as employers) that do not charge or collect premiums.
|
|
Michigan
|
Individual- File and Use; Small and Large- No Requirement
|
|
|
|
|
Minnesota
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
Mississippi
|
Individual, Small and Large- Informational
|
|
|
|
|
Missouri
|
Individual, Small and Large- No Requirement
|
|
|
|
|
Montana
|
Individual, Small and Large- No Requirement
|
MT H 105
|
Olson A (R)
|
Failed – Died
Would provide the state Insurance Commissioner the authority to conduct rate reviews and approve health insurance premiums.
|
|
MT D 269
|
Driscoll (D)
|
Failed - Adjourned – Draft
Would require that rates for health insurance coverage be filed with the Commissioner of Insurance for review, provides terms for rate approval, disapproval, and withdrawal of approval.
|
|
MT S 362
|
Economic Affairs Committee
|
Failed – Died
Would require proposed health insurance rates to be filed with the state Insurance Commissioner for review.
|
|
Nebraska
|
Individual- ?; Small and Large- With Form
|
|
|
|
|
Nevada
|
Individual- Prior Authorization; Small and Large- No Requirement
|
|
|
|
|
New Hampshire
|
Individual and Small- Prior Authorization; Large- File and Use
|
|
|
|
|
New Jersey
|
Individual- Prior Authorization; Small and Large- No Requirement (MLR)
|
|
|
|
|
New Mexico
|
Individual, Small and Large- Prior Authorization
|
NM S 208
|
Feldman (D)
|
Enacted - Chaptered. Chapter No. 2011-144
Amends state insurance code to provide greater transparency and new standards in rate review of applications for health insurance premium rate increases, providing for public hearings and administrative and judicial review of determinations in health insurance premium rate review matters.
|
|
NM S 499
|
Papen (D)
|
Failed - Adjourned – SENATE
Would amend insurance code to provide new rate review standards for change in classification of risks and rates, requiring hearings and administrative and judicial review of determinations in health insurance and health care plan rate and classification changes.
|
|
New York
|
Individual, Small and Large- Prior Authorization
|
NY S 2800
|
Office of the Governor
|
Enacted - Chapter No. 50
Makes appropriations for the support of government for services and expenses of the Department of Health for planning and implementing various healthcare and insurance reform initiatives authorized by federal legislation, including an HHS rate review grant.
|
|
North Carolina
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
North Dakota
|
Individual, Small and Large- Prior Authorization
|
ND H 1125
|
Keiser (R)
|
Enacted - Chapter Number 211
Provides that the state administer and enforce the provisions of the Affordable Care Act that apply to insurance companies (such as premium rate review) subject to the Commissioner's jurisdiction and to the extent that the provisions are not under the exclusive jurisdiction of any federal agency.
|
|
Ohio
|
Individual, Small and Large- Prior Authorization
|
|
|
|
|
Oklahoma
|
Individual, Small and Large- With Form
|
OK S 643
|
Johnson C (D)
|
Pending - Carryover - Senate Retirement and Insurance Committee
Relates to health insurance rate review process, would create the Oklahoma Individual Market Rate Review Act, would require insurers to submit changes in premium rates to the Insurance Commissioner, requiring the Commissioner to issue written findings and specifying that approved rates shall be guaranteed by the insurer for at least 12 months.
|
|
Oregon
|
Individual and Small- Prior Authorization; Large- File and Use
|
|
|
|
|
Pennsylvania
|
Individual, Small and Large- Prior Authorization
|
PA H 318
|
Deluca (D)
|
Pending - House Insurance Committee
Would require that rates shall not be excessive, inadequate or unfairly discriminatory, with added rate review and prior approval by the Department within a 45-day period.
|
|
Rhode Island
|
Individual, Small and Large- Prior Authorization
|
RI S 771
|
Sheehan (D)
|
Pending - Senate Health and Human Services Committee
Would provide for changes to the existing insurance rate review process, would require written approval from the Insurance Commissioner for a proposed insurance rate or rating formula. Rate increases would also be subject to a standard review process including the use of public meetings for consumers and the opportunity for insurers to challenge the Insurance Commissioner's decision.
|
|
RI H 5733
|
Keable (D)
|
Pending - House Health, Education and Welfare Committee
Would require the Health Insurance Commissioner to give prior written approval to a proposed change in a rate or rating formula to be used by any health insurer. Would also expand and give greater transparency to the process by which a health insurer may seek such a change in rate or a rating formula including required hearings in contested cases, to be held by the Health Insurance Commissioner.
|
|
South Carolina
|
Individual- Prior Authorization; Small and Large- No Requirement
|
|
|
|
|
South Dakota
|
Individual- File and Use; Small and Large- No Requirement
|
|
|
|
|
Tennessee
|
Individual, Small and Large- Prior Authorization
|
TN S 1539
|
Norris (R)
|
Enacted - Public Chaptered. Chapter No. 344
Requires rate review, with medical service corporations and hospitals to submit premium rates and risk classifications to the Commissioner of Commerce and Insurance prior to any group policies being issued.
|
|
TN H 2005
|
McCormick (R)
|
Pending - Carryover – HOUSE
Would require rate review, with medical service corporations and hospitals to submit premium rates and risk classifications to the Commissioner of Commerce and Insurance prior to any group policies being issued.
|
|
Texas
|
Individual, Small and Large- File and Use
|
|
|
|
|
Utah
|
Individual, Small and Large- File and Use
|
UT H 291
|
Harper (R)
|
Failed - Enacting Clause Struck
Would transfer all activities within the Utah Department of Insurance to the Department of Commerce, including insurance reform regulatory powers such as rate review, would create a replacement Division of Insurance.
|
|
UT H 128
|
Dunnigan (R)
|
Enacted - Chaptered. Chapter No. 400
Gives the Insurance Department the responsibility to conduct an actuarial review of rates established for the health benefit plan market. Authorizes the Department to establish a fee for the actuarial review. Removes language from the Risk Adjuster Board chapter of the Insurance Code related to the actuarial review of rates.
|
|
Vermont
|
Individual, Small and Large- Prior Authorization
|
VT S 56
|
Pollina (D)
|
Pending - Carryover - Senate Finance Committee
Would clarify Vermont's health insurance rate review process, requiring all rate and form filings made by a health insurer to be filed electronically, provides to make available an e-mail alert system in which members of the public may sign up on the Department's website to receive notice of a proposed rate increase for a selected health insurer with distribution of e-mail alerts within three business days after receiving a rate filing proposing a rate change.
|
|
VT H 65
|
Appropriations Committee
|
Enacted - Act No. 3
Adjusts state insurance rate review to be consistent with the Affordable Care Act by deleting the specific provision that required "maintaining the premiums at levels due on June 15, 2008."
|
|
Virginia
|
Individual- Prior Authorization; Small and Large- Informational
|
|
|
|
|
Washington
|
Individual, Small and Large- Prior Authorization
|
WA H 1220
|
Rolfes (D)
|
Enacted - Chapter No. 312
Provides that all individual or small group market health benefit plan rate filing be open to public inspection, except for the numeric values of each rate factor used by the health carrier, requires health insurers in those markets to submit rate disclosure summary information along with their rate filings, requires the Insurance Commissioner to submit a publicly-available rate summary form once the rate review process is completed. Eliminates the Insurance Commissioner's authority to review and disapprove rates for individual products.
|
|
WA S 5120
|
Keiser (D)
|
Pending - Carryover – SENATE
Would extend state regulation of insurance rate review by authorizing transparency and disclosure of the reasons for rates and decisions.
|
|
WA S 5398
|
Keiser (D)
|
Pending - Carryover – SENATE
Would continue the Insurance Commissioner's authority to review and disapprove rates for certain insurance products, by deleting a 2012 sunset date.
|
|
West Virginia
|
Individual, Small and Large- Prior Authorization
|
WV SCR 75
|
Stollings (D)
|
Failed - Adjourned – HOUSE
Would request Joint Committee on Government and Finance to authorize a study of rate review process established by the Health Care Authority.
|
|
WV H 3091
|
Frazier (D)
|
Failed - Adjourned - House Banking and Insurance Committee
Would expand and clarify rate review of health insurer rate changes.
|
|
Wisconsin
|
Individual, Small and Large- Use and File
|
|
|
|
|
Wyoming
|
Individual, Small and Large- No Requirement
|
|
|
|
State Actions to Implement or Expand Rate Review - (compiled by HHS, 9/1/11)
Health Insurance Premium Rate Review Grants: State-by-State Summary (as of September 2011)
On September 20, 2011, U.S. Department of Health and Human Services Secretary Kathleen Sebelius announced the second cycle of grant awards totaling $109 million to 28 States and the District of Columbia to help “fight unreasonable premium increases and protect consumers.” “The Affordable Care Act provides states with $250 million in Health Insurance Rate Review Grants, $48 million of which has previously been awarded to 42 states, the District of Columbia and five territories. “
States are proposing to use Cycle II grant funds in the following ways:
- Introduce legislation: Seven states are introducing legislation to strengthen their authority to review and/or publicize proposed rate increases.
- Expand scope of rate review: Nineteen states and the District of Columbia are proposing to use grant funds to expand the scope of rate review, for example, by reviewing rates in new markets or by reviewing rates for new products.
- Improve rate filing requirements: All 28 states and the District of Columbia are proposing to use grant funds to improve rate filing requirements, such as requiring insurers to provide additional information on administrative costs and requiring insurers to file rate increases in a standardized format.
- Improve transparency and consumer interfaces: All 28 states and the District of Columbia are proposing to use grant funds to improve consumer interfaces, such as developing a Rate Review Home Page at the Department of Insurance Website and providing opportunities for consumers to comment on proposed rate hikes via the website.
- Hire new staff: Twenty-three states and the District of Columbia are proposing to hire new staff during Cycle II to help review rates and protect consumers.
- Improve IT: Twenty-seven states and the District of Columbia are proposing to use grant funds to enhance IT capacity through the development of new or improved rate reporting systems designed to collect more robust rate data and allow for advanced analysis of rate filings.
|
State
|
Grantee
|
Cycle II Grant Amount
|
|
Arkansas
|
Insurance Department
|
$ 3,874,098.00
|
|
California
|
Department of Insurance
|
$ 2,162,121.00
|
|
California
|
Department of Managed Health Care
|
$ 2,162,121.00
|
|
Colorado
|
Division of Insurance
|
$ 4,031,188.00
|
|
Hawaii
|
Department of Commerce and Consumer Affairs
|
$ 3,000,000.00
|
|
Illinois
|
Department of Insurance
|
$ 3,531,085.00
|
|
Indiana
|
Department of Insurance
|
$ 3,890,752.00
|
|
Kentucky
|
Department of Insurance
|
$ 3,225,170.00
|
|
Maryland
|
Insurance Administration
|
$ 3,961,072.00
|
|
Massachusetts
|
Department of Insurance
|
$ 3,385,165.00
|
|
Michigan
|
Office of Financial Insurance Regulation
|
$ 3,994,728.00
|
|
Minnesota
|
Department of Commerce
|
$ 3,900,899.00
|
|
Mississippi
|
Department of Insurance
|
$ 3,783,208.00
|
|
Nevada
|
Division of Insurance
|
$ 3,959,972.00
|
|
New Hampshire
|
Insurance Department
|
$ 3,564,938.00
|
|
New Jersey
|
Banking and Insurance
|
$ 4,146,261.00
|
|
New Mexico
|
Public Regulation Commission Insurance Division
|
$ 3,000,000.00
|
|
New York
|
State Insurance Department
|
$ 4,469,996.00
|
|
North Carolina
|
Department of Insurance
|
$ 3,984,080.00
|
|
Ohio
|
Department of Insurance
|
$ 4,091,507.00
|
|
Oregon
|
Department of Consumer and Business Services
|
$ 4,040,777.00
|
|
Pennsylvania
|
Insurance Department
|
$ 4,312,084.00
|
|
Rhode Island
|
Department of Business Regulation
|
$ 3,724,651.00
|
|
South Dakota
|
Division of Insurance
|
$ 3,000,923.00
|
|
Tennessee
|
Department of Commerce and Insurance
|
$ 3,979,002.00
|
|
Utah
|
Department of Insurance
|
$ 3,315,679.00
|
|
Vermont
|
Department of Banking, Insurance, Securities and Health Care Administration
|
$ 3,804,045.00
|
|
West Virginia
|
Office of the Insurance Commissioner
|
$ 3,000,000.00
|
|
Wisconsin
|
Office of the Commissioner of Insurance
|
$ 3,958,844.00
|
|
D.C.
|
D.C. Dept. of Insurance, Securities and Banking
|
$ 3,803,324.00
|
|
|
|
|
|
Total
|
|
$ 109,057,690.00
|
Source: U.S. Department of Health & Human Services. " Over $100 Million to Help States Crack Down on Unreasonable Health Insurance Rate Hikes" http://www.healthcare.gov/news/factsheets/2011/09/rate-review09202011a.html (September 20, 2011)
2010 Health Insurance Premium Rate Review Grants
On Aug. 16, 2010, U.S. Department of Health and Human Services Secretary Kathleen Sebelius announced the award of $46 million to enhance states’ current processes for reviewing health insurance premium increases. The announcement included the following: " Forty-five states and the District of Columbia applied for grants, and each will receive $1 million in grant funds to help improve the review of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars. A list of states’ current health insurance rate review practices and a summary of their intended use of these new resources is below."
States have proposed to use this funding in a variety of ways.
-
Additional Legislative Authority: 15 states and the District of Columbia will pursue additional legislative authority to create a more robust program for reviewing or requiring advanced approval of proposed health insurance premium increases to ensure that they are justified.
-
Expand the Scope of Health Insurance Premium Review: 21 states and the District of Columbia will expand the scope of their current health insurance review, for example, by reviewing and pre-approving rate increases for additional health insurance products in their state.
-
Improve the Health Insurance Premium Review Process: All 46 state grantees will require insurance companies to report more extensive information through a new, standardized process to better evaluate proposed premium increases and increase transparency across the marketplace.
-
Make More Information Publicly Available: 42 states and the District of Columbia will increase the transparency of the health insurance premium review process and provide easy-to-understand, consumer-friendly information to the public about changes to their premiums.
-
Develop and Upgrade Technology: All state grantees will develop and upgrade existing technology to streamline data sharing and put information in the hands of consumers more quickly.
-
Five states did not apply for grant funding: Alaska, Georgia, Iowa, Minnesota and Wyoming, as of Aug. 30, 2010.
A state chart posted online by HHS provides a detailed summary of how each state intends to overhaul its health insurance premium review process.
Source: U.S. Department of Health & Human Services. "Health Insurance Premium Grants: Detailed State by State Summary of Proposed Activities." http://www.healthcare.gov/news/factsheets/rateschart.html (August 16, 2010)
State Rate Filing Statutes and Information
-
Prior to health reform, as of March 2010, at least 16 states had broad approval authority that applied to all, or major segments, of health insurance policies regulated by them. These states included Colorado, Florida, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, Vermont and West Virginia.
-
At least another 10 states had selective approval requirements for specific types of polices, such as individuals, small group or HMOs. These states included Connecticut, Georgia, Hawaii, Indiana, Nevada, New Hampshire, Oregon, South Carolina and Tennessee. A new Washington state law applies to the individual market.
Definitions:
-
"Deemed" - A law or regulation that requires insurance companies to file proposed rates giving the state agency a specific number of days to respond or reject the submission; if no agency response is issued, the rates are "deemed" presumed or declared to be approved.
-
"File and use" - A law or regulation that requires filing proposed rates a certain number of days in advance, which go into effect on the specified date, without a state role in approving or disapproving such rate schedules.
-
"State-regulated health policies" - While state laws can regulate regular "fully insured" health insurance policies, several types of health insurance are exempt, or barred from state regulation. These include all "self-funded or self-insured" plans, commonly offered by large employers (also called ERISA exempt plans), Medicare, Medicare Advantage and Medicare Part D plans.
-
Types of health insurance rate regulation. A summary of rate approaches compiled by NAIC.
| State |
Rate Filing Requirement |
Rate Filing Applies To: |
Law Citation |
| AK |
Prior approval if change is greater than 10 percent |
Each Insurer |
Alaska Stat. §§ 21.42.120, 21.42.123, 21.42.125, 21.09.270, 21.39.040, 21.39.210 |
| AZ |
Filed for review (HCSO and group health forms are not filed). |
Individual Health |
Ariz. Rev. Stat. Ann. § 20-1110; Reg. 20-6-607 |
| AR |
Prior approval (30 day deemed) |
Individual Health |
Ark. Stat. Ann. § 23-79-109; AR Ins. Rule & Reg. 57 |
| CO |
Prior approval (60 day deemed) if increase requested |
All Health |
Colo. Rev. Stat. §§ 10-16-107, 10-16-107.2,10-10-109; Ins. Reg. 1-1-6; 4-2-11, 4-4-2; CO Bulletin B-4.18
HB 08-1389, (Session Law Chapter 439) effective January 2009, requires the carrier to submit for prior approval of rate increases at least 60 days before the proposed implementation. Applies to increases only or, for dental insurance, a rate increase of 5 percent or more. In addition, non-developed rates, including Medicaid, Medicare and the Children’s Basic Health Plan, are not subject to prior approval.
|
| Prior approval (30 day deemed) |
Medicare Supplement |
Colo. Rev. Stat. § 10-16-321; Ins. Reg. 4-3-1 |
CT
|
Prior approval (45 days) |
HMOs, Medicare Supplement, Credit Health |
Conn. Gen. Stat. §§ 38a-182, 38a-183, 38a-474, 38a-481, 38a-513; Reg. 38a-652; Reg. 38a-481-1 to 38a-481-4
Conn. Gen. Stat. § 38a-183:
"The commissioner may refuse such approval if he finds such amounts to be excessive, inadequate or discriminatory."
Conn. Gen. Stat. § 38a-474. Rate increases: Procedure. Age, gender, previous claim or medical history rating prohibited. Exceptions.
|
| Prior approval (30 day deemed) |
Individual Health (not HMOs, Medicare Supplement, Credit Health) |
| DC |
Prior approval (30 day deemed) |
Individual Accident and Sickness |
D.C. Code Ann. §§ 31-4712, 31-3508 |
| Prior approval (90 day deemed) |
Health Product with Mental Illness Benefit; Drug or Alcohol Abuse |
D.C. Code Ann. § 31-3109 |
FL
|
Prior approval (30 day deemed) |
All Health |
Fla. Stat. § 627.410
"Each insurer … shall make an annual filing with the office no later than 12 months after its previous filing, demonstrating the reasonableness of benefits in relation to premium rates."
|
| HI |
Prior approval |
All Managed Care Plans |
Hawaii Rev. Stat. § 431:14G-105 |
| IN |
Prior approval (30 day deemed) |
Individual Health |
Ind. Code § 27-13-7-11 |
| Prior approval |
HMOs |
Ind. Code § 27-13-20-1 to 27-13-20-2
"The rates to be used by a health maintenance organization, including the actuarial assumptions underlying those rates, must be filed with the commissioner for approval and:
1) must be established in accordance with actuarial principles for various categories of enrollees and, in the case of a group contract, shall not be individually determined based on the status of an enrollee's health;
2) must be developed by an actuary or other qualified person acceptable to the commissioner; and
3) may not be excessive, inadequate, or unfairly discriminatory."
|
| IA |
Prior approval (30 day deemed and 60 days prior to effective date) |
All Health |
Iowa Code § 514A.13; Iowa Reg. 191-30.5, 191-36.9 |
| MD |
Prior approval (90 days for changes) |
All Health |
Md. Ins. Code Ann. §§ 12-203, 12-205, 2-112; Md. Reg. 31.10.01.02, 31.10.01.02A, 31.04.17 |
MA
|
Prior approval |
Health plans covered by 2006 "Connector Board" reforms, Non-group, small group (2008, 2010), All health insurance (2010 regulation plan)
|
2010: H.2585, signed as Chapter 288:
Enhanced DOI Insurance Review and Transparency- Require insurance companies to file premium rate increases to the Division of Insurance (DOI) 90 days before their effective date. DOI will review proposed premium rates and, for the next two years, may disapprove rates based on the inclusion of excessive administrative costs or surplus margins. This rigorous review process will ensure that small businesses and individuals receive the most efficient product possible. Premium rates will be presumptively disapproved if :
- Insurer administrative expenses increase by more than New England medical inflation rate,
- The ratio of administrative expense compared to medical expenses (Medical Loss Ratio) is less than 88%, or 90% in year two or,
- If the amount set aside for surplus or profits exceeds 1.9% of the total premium.
- If the insurer does not meet the medical loss ratio standard, the insurer must issue rebates to all members. DOI may waive this requirement only if fiscal solvency is threatened or there has been a demonstrated improvement in the medical loss ratio.
"The commissioner shall disapprove any change to small group rating factors that is discriminatory or not actuarially sound. Rate filing materials submitted for review by the division shall be deemed confidential." (Signed into law 8/3/2010) 2006 Mass. Acts, Chapter 58: Mass. Gen. Laws §176J:6S.2863 of 2008, "An Act to Promote Cost Containment..."Mass. Reg. 211 CMR 41.00 The Division of Insurance disapproved 235 of the 274 rate increases filed by health insurers for small businesses on April 1, 2010. Insurance Commissioner Joseph Murphy disapproved the base rates after they were " found to include excessive increases and rates unreasonable relative to the benefits provided." The disapprovals follow emergency regulations filed on Feb. 10 that require carriers to file small-group rates 30 days before their effective date. |
| MN |
Prior approval (60 day deemed) |
All Policies |
Minn. Stat. §§62A.02, 60A.14
|
|
MS
|
Prior approval
|
Medicare Supplement
|
Miss. Code Ann. § 83-9-3; Ins. Reg. A&H 73-4
|
| MT |
Prior approval for rates higher that those established.
|
Credit Insurance
|
Mont. Code Ann. §§ 33-2-708, 33-2-709, 33-1-501; MT ADC 6.6.508A, 6.6.1107
|
|
Rates must be accepted prior to use.
|
Medicare Supplement
|
|
NV
|
Prior approval
|
Medicare Supplement
|
Nev. Rev. Stat. §§ 680B.010, 687B.120, 689A.360, 680B.010; NV ADC 687B.229
689A.360: "Each insurer issuing individual health insurance policies for delivery in this state shall, before use thereof, file with the commissioner its premium rates and classification of risks pertaining to such policies. The insurer shall adhere to its rates and classifications as filed with the commissioner. The insurer may change such filings from time to time as it deems proper."
|
|
NH
|
Prior approval (30 day deemed)
|
All Individual Health, Group Medicare Supplement, Long Term Care, Small Employer Medical, Hospital or Surgical
|
N.H. Rev. Stat. §§ 415:1, 415:18; N.H. Reg. Ins. 401.02, 401.03
|
|
NJ
|
Prior approval (60 day deemed. Resubmission- 30 day deemed)
|
Individual Health, Long Term Care
|
N.J. Rev. Stat. §§ 17B:26-1, 17B:27-25, 17B:27-49, 17B:27E-11, 17B-27-74; N.J. Reg. 11:4-16,11:4-18, 11:4-40
"The commissioner may refuse approval if he finds that such rates are excessive, inadequate or unfairly discriminatory; or do not exhibit a reasonable relationship to the benefits provided by such contracts. At all times such rates and form of subscribers' contracts shall be subject to modification and approval of the commissioner of insurance."
|
|
NM
|
Prior approval (60 day notice to policy holder)
|
All Health
|
N.M. Stat. Ann. §§ 59A-18-12, 59A-18-13, 59A-6-1
|
|
NY
|
Prior approval
|
Individual Health and Group and Blanket Forms Where Jurisdiction Applies, Small-employer or individually purchased plans (2010)
|
N.Y. Ins. Law §§ 3201,4308,4235(h); 11 NYCRR 52.40
Ins. Law §§ 3201; 4308: "The superintendent may refuse such approval if he finds that such premiums, or the premiums derived from the rating formula, are excessive, inadequate or unfairly discriminatory, provided, however, the superintendent may also consider the financial condition of such corporation in approving or disapproving any premium or rating formula."
Ins. Law §§ 4235(h)
2010 Law - signed 6/9/2010. - Applies to about 3 million people enrolled in individual and small group.
|
|
NC
|
Prior approval (All individual rate revisions, group Medicare Supplemental, medical service corp. rates)
|
All Health
|
N.C. Gen. Stat. §§ 58-6-5, 58-51-85, 58-51-95, 58-65-40, 58-68-45, 58-67-50
|
|
ND
|
Prior approval (60 day deemed)
|
All Health
|
N.D. Cent. Code §§ 26.1-11-06, 26.1-30-19 to 26.1-30-20
"No insurance policy, contract, agreement or rate schedule may be issued or delivered in this state until the form of that policy, contract, agreement or rate schedule has been filed with and approved by the commissioner."
"A form must be disapproved if the benefits provided are unreasonable in relation to the premium charge or if the benefits do not comply with chapters 26.1-36 and 26.1-37." [2011 law]
|
|
OH
|
Prior approval (30 day deemed)
|
All Health
|
Ohio Rev. Code Ann. §§ 3923.02, 3923.021; OH ADC 3901-1-57
If a filing "contains any provision which… contains inconsistent provisions, or contains any question, provision, title, heading, backing or other indication of its contents, which is ambiguous, misleading or deceptive, or likely to mislead or deceive the policyholder, certificate holder or applicant…"
The superintendent may "disapprove such filing after finding that the benefits provided are unreasonable in relation to the premium charged."
|
|
OR
|
Prior approval
|
Individual and Groups of 1-25
|
Or. Rev. Stat. §§ 742.003, 746.005, 743.018, 743.730(17)(27)(28), 743.737, 743.760; Reg. 836-010-0011
|
|
Prior approval
|
Medicare Supplement, except certain groups under Reg. 836-052-0114(5)
|
Or. Rev. Stat. § 836-052-0014
|
|
Prior approval (for deviations from prima facie)
|
Credit Life and Health
|
Or. Rev. Stat. § 836-060-0043
|
|
PA
|
Prior approval (45 day deemed)
|
All Health; Some groups are exempt if they meet requirements
|
Pa. Cons. Stat. §§ 40-18-3809, 40-18-3803; 49 P.S. § 50
|
|
RI
|
Prior approval (60 day deemed)
|
All Health
|
R.I. Gen. Laws §§ 27-18-8, 42-14-18; Reg. R27-23-1101 to R27-23-1102, R27-23-1106 to 27-23-1107
|
|
SC
|
Prior approval (90 day deemed)
|
Individual health, Group Medicare Supplement
|
S.C. Code Ann. §§ 38-71-310, 38-71-720; Reg. 69-46; Bulletin 2-93
|
|
TN
|
Prior approval (30 day deemed)
|
All Health Except Experience Rated Groups
|
Tenn. Code Ann. § 56-26-102; Reg. ch. 0780-1-20
|
|
VT
|
Prior approval (30 day deemed)
|
All Health
|
Vt. State Ann. tit. 8 § 4062; Reg. 93-5
|
|
WA
|
Prior approval (60 day deemed)
|
Healthcare Service Contractor, Large Group
|
Wash. Rev. Code § 48.44.020
|
| Prior approval (60 day deemed) |
HMO Large Group |
Wash. Rev. Code § 48.46.060 |
| Prior approval (30 day deemed) |
Small Group Health Plan Rate Changes, Medicare Supplement |
Wash. Rev. Code §§ 48.18.100, 48.18.010, 48.19.010, 48.20.025, 48.21.045, 48.66.035, 48.44.017, 48.44.023, 48.46.062, 48.46.066 |
| File and use (subject to disapproval) |
All Other Health (Not including individual health) |
|
WV
|
Prior approval (60 day deemed); Rate filings required for new products or rate changes
|
All Health, Mass-Marketed Health
|
W. Va. Code §§ 33-6-8, 33-6-34, 33-16B-1, 33-6-8(b)(2); 114 CSR 26-3
|
Source: National Association of Insurance Commissioners (NAIC), 2009, 2010.
Note: States not included on the chart are states that have Informational, Use and File and File and Use processes.
Types of Rate Regulation
There are four main types of rate regulation in the individual and small group markets today:
Actuarial Justification:
In markets with actuarially justified rating requirements, insurers must demonstrate a correlation between case characteristics and increased medical claims costs. The NAIC has adopted safe harbors for case characteristics commonly used for setting premiums within which plans may generally vary rates without providing justification. Plans that vary rates in excess of these safe harbors may be required to submit data justifying their use of the characteristics in question.
Rating Bands:
Particularly in the small group market, many states have used rating bands that limit the variation in premiums attributable to health status and other characteristics. Rating bands are either expressed as a ratio of the highest rating factor to the lowest (e.g. 1.5:1) or as the allowable variation above and below an index rate (e.g. +/- 30%). Rating bands may also take the form of composite rating bands that place limits on the combined effects of multiple case characteristics (e.g., a composite rating band that allows 4:1 variation based upon health status, age, gender, industry, and group size combined).
Adjusted Community Rating:
Adjusted (or modified) community rating laws prohibit the use of a person's health or number of claims in setting premiums. Other case characteristics, such as age and geography, may be used to vary premiums, though limits may be placed upon these factors as well.
Pure Community Rating:
"Pure" community rating laws prohibit the use of any case characteristics besides geography to vary premiums. Only New York generally, and Michigan for BC/BS policies use this approach.
Source: Summary of rate approaches compiled by NAIC
Related Articles and Resources
- California subpoenas big health insurers' financial records - The California attorney general's office subpoenaed financial records of California's seven largest health insurance companies as part of an investigation into whether they illegally raised customer premiums and denied payment of legitimate claims. Los Angeles Times, 2/26/10. Read More...
- Sebelius to Insurers: It’s Not Too Late to Work Together - New York Times, 3/10/2010.
- NCSL Health Insurance Regulation - list of online resources, 3/2010.
- Rate Review: Holding Health Plans Accountable for Your Premium Dollars- Families USA, 4/2010.
- HHS pressed to resist health insurance lobbying- "Health insurance industry efforts to lobby for weaker federal regulations should be strongly resisted, a consumer advocacy group warned this week." Healthwatch, 11/11/10.
- New insurance rate regulations pending- "Highly anticipated regulations defining what constitutes "unreasonable" health insurance premium increases are expected any day now that federal regulators have sent them to the Office of Management and Budget for final review." Healthwatch, 12/16/10.
- U.S. Proposes Rules on Raising Insurance Premiums- "The Obama administration said on Tuesday that it would require health insurance companies to disclose and justify any increases of 10 percent or more in the premiums they charge next year." New York Times, 12/21/10.
-
Legislators consider more scrutiny of health insurance rate hikes- Connecticut reviews process by which they regulate rate increases, The CT Mirror, 1/20/11.
-
Federal Auditors Will Soon Review Health Insurance Rates in 10 States- "The Obama administration will soon take over the review of health insurance rates in 10 states where it says state officials do not adequately regulate premiums for insurance sold to individuals or small businesses." New York Times, 7/25/11.
Sources:
1) This material includes a simplified excerpt of a 50-state table originally prepared by the National Association of Insurance Commissioners. This version, updated and annotated by NCSL, lists only the states that have some use of "prior approval of rate increase" requirements affecting health insurance.
2) Westlaw "50-State Surveys: Notice and Permissibility Requirements for Premium/Rate Increases," June 2009.
NCSL Contacts: Katherine Mason, Policy Associate and Richard Cauchi, Program Director; NCSL Health Program, Denver. |