State Approval of Health Insurance Rate Increases

9/18/2016
 

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 state legislatures and governors 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 federal 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.
  • States to Receive $22 million for 2016.  On June 15, 2016 the Centers for Medicare & Medicaid Services (CMS) announced the availability of $22 million in funding to state insurance regulators to use for issuer compliance with Affordable Care Act key consumer protections. "These departments are responsible for making sure that premiums are reasonable and justified, ensuring company solvency, and protecting consumers,” said Kevin Counihan, CEO of the Health Marketplace program within HHS. *NEW*

Alabama Implements Rate Review Program. Alabama regulators notified the federal government that, for the first time, they plan to review premium hikes on the state exchange, which currently only includes Blue Cross and Blue Shield of Alabama. (AL.com, June 15, 2016) 

  • Rate Review Submissions to States and HHS.   Online tool: Select the company name or product name to find out more information about these rate increases. You can sort the search results listing by selecting the sort icon below that appropriate column heading.   Use this link: https://ratereview.healthcare.gov/#urrresults 

​​2017 Preliminary Filed Rates - Reported in The New York Times, 7/17/2016

  • Texas, Blue Cross and Blue Shield is requesting rate increases of nearly 60 percent.
  • Oklahoma, Blue Cross and Blue Shield has proposed increases that average 49 percent.
  • Missouri, Humana has filed for a 34 percent increase.
  • Michigan,Humana is seeking a 39 percent increase  according to data posted by the State Insurance Department.
  • Oregon insurance commissioner recently approved a 24 percent increase for Providence Health Plan, which has the largest enrollment of any carrier in the state’s individual insurance market.
  • The largest insurer in Tennessee, Blue Cross and Blue Shield, has requested rate increases averaging 63 percent, according to the state insurance commissioner.
  • Blue Cross and Blue Shield of North Carolina, which raised individual rates by an average of 32.5 percent this year, has requested a further increase of 18.8 percent for 2017.
  • In Wyoming, the proposed rate increases are relatively modest, less than 10 percent. But Wyoming already has some of the highest rates in the country, 
  • All three carriers say they have lost money on many policies sold to individuals and families under the Affordable Care Act.

Missouri law authorizes Rate Review with new law, SB 865, signed July 2016; effective 2018 [article 7/2016]

Rate Review Annual Report for 2015 and 2014: [Published by CMS Dec. 2015; Download PDF; 10 pages]
  • Rate review reduced total premiums for renewed single risk pool plans by an estimated $1.1 billion in the individual market and by $418 million in the small group market, for a total of $1.5 billion.
  • The weighted average rate increase implemented for single risk pool coverage was 6.9 percent in the individual market (8.7 percent initially requested) and 4.3 percent in the small group market (5.1 percent initially requested).
  • In the individual market, altogether, an estimated 6.5 million consumers benefited from rate review.30 percent of covered lives were projected to enroll in single risk pool plans with a rate increase that was reduced or denied. In the small group market, the projection percentage was 19.6.
  • 577 health insurance issuers submitted 1,933 single risk pool product rate filings for the individual market in 2015. 683 of the 1,933 products were new (not offered in 2014). 443 of the 1,250 rate filings for renewed products requested a rate increase of 10 percent or more. Among all single risk pool filings with a rate change request of any size, the average rate increase requested was 8.7 percent and the average implemented was 6.9 percent. After the review process was complete, the percentage of filings with a rate increase of 10 percent or more dropped by approximately 24 percent.  Premiums were reduced by an estimated $1.1 billion in the individual market for single risk pool coverage in CY 2015 based on the difference between the requested and implemented rate changes.
  • $250 million in grant funding has been available to states over a five-year period to help with rate review activities. (Effective during the 2010 plan year.)  "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

Beginning September 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 June 2016:
  • 46 states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands have effective rate review in at least one insurance market;
  • Alabama became the 45th state, as announced in April 2016.
  • Missouri became the 46th state, with a July 2016 law.
  • 43 states, the District of Columbia, have effective review for all insurance markets and issuers.
  • The Federal government will conduct review in four-five  states and two U.S. territories (American Samoa, Northern Mariana 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 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.

  • Since mid-September 2011, consumers in every state can go to HealthCare.gov to view easy-to-access, disclosure information explaining proposed increases that are 10 percent or higher than last year’s rates.  Consumers 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 are given the ability to comment on large proposed rate increases.



 

List of Federally Approved "Effective" State Rate Review Programs, as of 2013
Alabama added April 2016

The list below indicates whether Federal or state process are authorized to be used to review proposed insurance rate increases.  The data and definitions were originally published by HHS as of 2/16/2012 and updated May 3, 2013.
State Individual Market Small Group Market Effective Rate Review Program
Alabama State State Yes (as of June 2016)
Alaska* State State Yes
Arizona State Federal Partial
(Associations: Partial)
Arkansas State State Yes
California State State Yes
Colorado State State Yes
Connecticut State State Yes
Delaware State State Yes
Florida State State Yes
(Associations: Partial)
Georgia State State Yes
Hawaii* State State Yes
(Associations: No)
Idaho* State State Yes
(Associations: Partial)
Illinois State State Yes
Indiana  [Rate Watch website] State State Yes
Iowa* State State Yes
Kansas State State Yes
Kentucky State State Yes
(Associations:  Partial)
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
(Associations: Partial)
Missouri Federal (to State in 2018) Federal No  (to State in 2018)
Montana State State Yes
Nebraska State State Yes
(Associations: Partial)
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
(Associations:  Partial)
North Dakota State State Yes
Ohio State State Yes
Oklahoma Federal Federal No
Oregon* State State Yes
(Associations: Partial)
Pennsylvania** State State Yes
(Associations: Partial)
Rhode Island State State Yes
(Associations: Partial)
South Carolina State State Yes
South Dakota State State Yes
Tennessee State State Yes
Texas Federal Federal No
Utah State State Yes
Vermont*** State State Yes
(Associations: Partial)
Virginia State State Yes
Washington State State Yes
(Associations: No)
West Virginia State State Yes
Wisconsin State State Yes
Wyoming Federal Federal No
District/Territories Individual Market Small Group Market Effective Rate Review Program
District of Columbia State (District) State (District) Yes
American Samoa Federal Federal No
Guam* State State Yes
Northern Mariana Islands Federal Federal No
Puerto Rico* State State Yes
Virgin Islands State (Territory) State (Territory) Yes
*Notes:
* Oregon State law exempts from rate review association plans that retain 95% or greater of their employer groups (ORS 743.734)
** Pennsylvania will have effective rate review authority for the non-association commercial small group market effective March 21, 2012 per enacted legislation (Act 134 of 2011).  As for the association rates, effective March 21, 2012, Pennsylvania will begin reviewing rates for small group associations situated in Pennsylvania along with the rates for individual associations situated in the State that it is already reviewing.  CMS will continue to review the rates for individual and small group associations that are not situated in Pennsylvania.
*** In Vermont, non-situated plans are exempt from filing with the State under the following circumstances (8 V.S.A. § 3368):
  1. the master policy was lawfully issued and delivered in a State in which the insurer was authorized to do insurance business (and thus regulated by the State of issue)
  2. (i) no more than 25 of the certificate holders are Vermont residents; or (ii) the master policy covers one or more certificate holders who reside in Vermont, are employed at a workplace located outside Vermont and have obtained insurance coverage through the workplace;
  3. The person or entity holding the master policy exists primarily for purposes other than to procure insurance, is not a Vermont corporation or resident, and does not have its principal office in Vermont; and
  4. The policy is not offered for sale by an agent or broker licensed in Vermont, offered by mail to a Vermont resident, or marketed in Vermont in a similar manner.
In this chart, the term “situated” refers to the state where the policy (not the individual certificate) is issued; the "Situs State" is the state that has the primary jurisdiction and whose laws, rules, and regulations govern the policy. Additionally, for the purposes of this chart, an “exempt” plan is one that is exempt under state law from state rate review requirements.
‡ Examples of Status Updates During Implementation (2011-2013):
 
  • Iowa: Following the release of August 15, 2011 Bulletin 11-06 from the Iowa Insurance Division, the state 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 situated in Hawaii.
  • As of January 1, 2012, Alaska has rate review authority in all markets per State statute.
  • Effective August 1, 2012, the Idaho Department of Insurance will exercise their authority to review rates for Association Products in the Small Group Market.
  • Effective January 1, 2013, subsequent to new regulations authorizing the AZ Department of Insurance to collect and conduct Individual Market, including Association Product rate reviews, supported by a bulletin and other information provided by AZ, the Department of Insurance will be reviewing all Individual Market rate increase requests above the review threshold.
 

News and Articles of Interest

 
 
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.

Archive: Premium Rate Review Laws and Legislation - as of 2011

 
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 new laws to address rate review.  For more information about the legislation filed for all of 2011-2013 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      
.

Estimates of Savings by State for Rates Proposed at 10 Percent or Higher (Reported September 2013)

Savings by state are estimated using the Rate Review Justification (RRJ) data submitted to CCIIO for CY 2012.  Note that RRJ data differs from the Rate Review Grant data in that RRJ data only includes rate increase requests of 10 percent or more and thus represents a subset of the $1.2 billion in savings previously described.  The estimated savings, which include both the individual and small group markets, are calculated by taking the difference between the average requested rate increase, and the average approved rate increase, weighted by covered lives, for each filing that had a modification, rejection, or withdrawal.   This method assumes that each enrollee in these plans paid the statewide average premium for the year which is a limitation of the analysis. 

 
  Individual Market Small Group Market Total, Both Markets
State Number of Enrollees with Rate Review Savings Estimated Premium Savings Number of Enrollees with Rate Review Savings Estimated Premium Savings Number of Enrollees with Rate Review Savings Estimated Premium Savings
Arizona - - 765 $618,753 765 $618,753
Arkansas 266 $24,279 - - 266 $24,279
California 166,652 $35,668,218 377 $269,009 167,029 $35,937,228
Colorado 30,490 $12,090,243 - - 30,490 $12,090,243
Connecticut 163 $10,005 84,799 $6,189,943 84,962 $6,199,947
Florida 11,571 $6,162,406 12,215 $775,031 23,786 $6,937,436
Illinois 15,991 $2,496,786 - - 15,991 $2,496,786
Indiana 3,304 $1,690,440 13,881 $2,154,155 17,185 $3,844,596
Iowa - - 6,929 $1,167,576 6,929 $1,167,576
Kansas - - 2,104 $838,940 2,104 $838,940
Maine 1,105 $413,072     1,105 $413,072
Michigan 20,503 $3,573,777 61,437 $7,352,003 81,940 $10,925,781
Missouri 461 $74,294 - - 461 $74,294
Nevada 7,484 $1,074,018     7,484 $1,074,018
New York - - 94,991 $22,636,478 94,991 $22,636,478
North Carolina - - 2,174 $70,151 2,174 $70,151
North Dakota 4,580 $1,710,182 1,416 $507,387 5,996 $2,217,568
Oregon 15,554 $2,506,854 - - 15,554 $2,506,854
Pennsylvania - - 81,200 $3,895,436 81,200 $3,895,436
South Carolina 7,684 $1,649,812 1,421 $406,381 9,105 $2,056,193
South Dakota 225 $133,522 499 $242,299 724 $375,821
Utah 3,519 $1,075,618 - - 3,519 $1,075,618
Vermont 600 $261,378 2,302 $96,164 2,902 $357,542
Washington 309,768 $31,818,918 21,360 $89,482 331,128 $31,908,400
West Virginia - - 221 $197,110 221 $197,110
Wisconsin 286 $108,154 10,350 $4,702,400 10,636 $4,810,554
Total 600,206 $102,541,976 398,441 $52,208,698 998,647 $154,750,674
Sources: Rate Review Justification dataset for premium increase requests of 10% or more, as well as numbers of enrollees affected by each rate increase request.
 

 

 

NCSL Research
HHS: Total Savings from Rate Review Programs

 
As part of the Rate Review Grants program, HHS collects data from states on all rate increases, even those below 10 percent.  Based on this information, the estimated national average rate increase implemented in the individual market in 2011 is approximately 1.4 percent lower than the increase originally requested by insurance companies.[6]  Based on 2011 individual market premium data, this difference would equate to nearly $425 million in savings to consumers.
In the small group market, the estimated rate increases implemented are approximately 0.8 percent lower than the rate originally requested by insurance companies.[7]  Based on 2011 small group market premium data, this difference would equate to over $600 million in savings to consumers.  Taken together, premiums in the individual and small group market were lowered by an estimated $1 billion compared to the amount initially requested due to rate review.

State Actions to Implement or Expand Rate Review - (compiled by HHS, 9/1/11)
 

Health Insurance Premium Rate Review Grants: State-by-State Summary  (December 2012)


On September 21, 2012, HHS awarded Phase II of Cycle II totaling $8 million to states and territories to be used for two years. These grant funds are helping states improve their reviews of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.  Arizona, Guam, Northern Mariana Islands and Puerto Rico each received a $2,000,000 grant award. 

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.
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 Grantee  Cycle 1 Grant Amount  Cycle II Grant Amount
Alabama Alabama Department of Insurance  $                1,000,000.00  $                                              - 
Alaska    $                                  -   $                                              - 
Arizona Arizona Department of Insurance  $                1,000,000.00  $                             2,000,000.00
Arkansas Insurance Department  $                1,000,000.00  $                             3,874,098.00
California Department of Insurance  $                1,000,000.00   $                          2,162,121.00
Colorado Division of Insurance  $                1,000,000.00   $                          4,031,188.00
Connecticut Connecticut Insurance Department  $                1,000,000.00  $                                              - 
Delaware Delaware Department of Insurance  $                1,000,000.00  $                                              - 
Florida    $                                  -   $                                              - 
Georgia    $                                  -   $                                              - 
Hawaii Department of Commerce and Consumer Affairs  $                1,000,000.00   $                          3,000,000.00
Idaho    $                                  -   $                                              - 
Illinois Department of Insurance  $                1,000,000.00   $                          3,531,085.00
Indiana Department of Insurance  $                1,000,000.00   $                          3,890,752.00
Iowa    $                                  -   $                                              - 
Kansas Insurance Department  $                1,000,000.00  
Kentucky Department of Insurance  $                1,000,000.00   $                          3,225,170.00
Louisiana Louisiana Department of Insurance  $                1,000,000.00  $                                              - 
Maine The Maine Bureau of Insurance  $                1,000,000.00  $                                              - 
Maryland Insurance Administration  $                1,000,000.00   $                          3,961,072.00
Massachusetts Department of Insurance  $                1,000,000.00   $                          3,385,165.00
Michigan Office of Financial Insurance Regulation  $                1,000,000.00   $                          3,994,728.00
Minnesota Department of Commerce  $                                  -    $                          3,900,899.00
Mississippi Department of Insurance  $                1,000,000.00   $                          3,783,208.00
Missouri Department of Insurance  $                1,000,000.00  
Montana Montana Commissioner of Securities and Insurance  $                1,000,000.00  $                                              - 
Nebraska Nebraska Department of Insurance  $                1,000,000.00  $                                              - 
Nevada Division of Insurance  $                1,000,000.00   $                          3,959,972.00
New Hampshire Insurance Department  $                1,000,000.00   $                          3,564,938.00
New Jersey Banking and Insurance  $                1,000,000.00   $                          4,146,261.00
New Mexico Public Regulation Commission Insurance Division  $                1,000,000.00   $                          3,000,000.00
New York State Insurance Department  $                1,000,000.00   $                          4,469,996.00
North Carolina Department of Insurance  $                1,000,000.00   $                          3,984,080.00
North Dakota Department of Insurance  $                1,000,000.00  $                                              - 
Ohio Department of Insurance  $                1,000,000.00   $                          4,091,507.00
Oklahoma    $                                  -   $                                              - 
Oregon Department of Consumer and Business Services  $                1,000,000.00   $                          4,040,777.00
Pennsylvania Insurance Department  $                1,000,000.00   $                          4,312,084.00
Rhode Island Department of Business Regulation  $                1,000,000.00   $                          3,724,651.00
South Carolina Department of Insurance  $                1,000,000.00  
South Dakota Division of Insurance  $                1,000,000.00   $                          3,000,923.00
Tennessee Department of Commerce and Insurance  $                1,000,000.00   $                          3,979,002.00
Texas Department of Insurance  $                1,000,000.00  
Utah Department of Insurance  $                1,000,000.00   $                          3,315,679.00
Vermont Department of Banking, Insurance, Securities and Health Care Administration  $                1,000,000.00   $                          3,804,045.00
Virginia Bureau of Insurance  $                1,000,000.00  
Washington State Office of the Insurance Commissioner  $                1,000,000.00  
West Virginia Office of the Insurance Commissioner  $                1,000,000.00   $                          3,000,000.00
Wisconsin Office of the Commissioner of Insurance  $                1,000,000.00   $                          3,958,844.00
Wyoming    $                                  -   $                                              - 
D.C. D.C. Dept. of Insurance, Securities and Banking  $                1,000,000.00   $                          3,803,324.00
       
Total    $              43,000,000.00   $                     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)
Source: U.S. Department of Health & Human Services. Rate Review Works report,  http://www.healthcare.gov/law/resources/reports/rate-review09202011a.pdf (September 20, 2011)

 

State Rate Filing Statutes and Information -

(Update for 2014 in progress/under construction, as of 5/29/2014)
  • As of May 2014, 40 states have statutory authority for "prior approval," or disapproval, of all or major segments, of health insurance policies regulated by the state. This authority is granted independent of provisions or requirements in the Affordable Care Act (ACA), but usually is coordinated with HHS rate review requirements.
  • Prior to federal health reform, as of March 2010, at least 26 states had broad approval authority that applied to all, or major segments, of health insurance policies regulated by them. The broadest authority was applied in 16 states, including 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, Tennessee and Washington (2010; applies to the individual market). 
  • States not included on the chart are states that have Informational, Use and File and File and Use processes.
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 with 45 day waiting period, if change is greater than 10 percent
Each Insurer
Individual health; large employer health care
 
Alaska Stat. §§ 21.42.120, 21.42.123, 21.42.125, 21.09.270, 21.39.040, 21.39.210
AZ
File and use
Individual Health
Ariz. Rev. Stat. Ann. § 20-1110; Reg. 20-6-607
AR
Prior approval
(30 day deemed)
Individual Health
HMO
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
(updated
for 2014)
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
(updated
for 2014)
 
Prior approval
(30 day deemed or 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), 2011, 2013
 
DEFINITIONS: 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


 NCSL Contacts:  Richard Cauchi, Program Director; NCSL Health Program, Denver.