Testimony given by Sen. Tom Harkin, D-Iowa, at a Senate committee hearing on the PPACA indicated that rate review provisions are helping to rein in health insurance premiums.
In contrast, Sen. Mike Enzi, R-Wyo., said PPACA is already driving up insurance premiums.
Sen. Enzi argued that "the reason premiums are going up is because of the law (that was)enacted,” Mr. Enzi said. “(Legislators) would much rather point their fingers at the insurance companies and lay all the blame for these increased premiums on them.”
Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services (HHS), testified, according to National Underwriter, that the PPACA rate review provisions are bringing more transparency to the rate review process. Larsen also noted that those provisions and others, such as the minimum medical loss ratio (MLR) provisions, already are making a differences in states such as North Carolina in keeping rate increases down.
States are being awarded $250 million in federal grants to set up or improve their rate-review process. So far, 41 states have taken steps in that direction, according to a report released this week by the Government Accountability Office.
The PPACA rate review provisions and HHS rate review regulations require either state or federal officials to review notices of health insurance rate increases that exceed 10% and require that information about the proposed increases be posted on the Web.
Selected Rate Review Results
Only five states reported that more than 50% of the rate filings their regulators reviewed in 2010 were disapproved, withdrawn or resulted in rates lower than originally proposed, according a state survey-based report released today by the Government Accountability Office. Another 19 states reported such rate-lowering outcomes occurred among less than 10% of the rate increases they reviewed.
The relatively small impact of regulatory rate reviews came despite at least $50 million provided so far to states by the Patient Protection and Affordable Care Act to bolster states' oversight of rates charged by healthcare insurers in their jurisdictions.
So far, 41 of the 45 states that have received roughly $1 million each to bolster their rate reviews of insurers have taken steps to do so, according to the GAO report. Those actions included two-thirds of state grant recipients increasing their review infrastructure, such as hiring more review staff or bolstering their rate reviewing information technology.
Despite their relatively small effect, so far, those state rate-review efforts were hailed by Senate Democrats Tuesday as the key to limiting future increases in health insurance rates.
The minimum MLR provision requires insurers to spend at least 85% of large group premiums and 80% of individual and small group premiums on health care and quality improvement or else pay customers rebates.
In North Carolina, Larsen said, the minimum MLR system has already caused Blue Cross and Blue Shield of North Carolina, Chapel Hill, N.C., to refund about $156 million to 215,000 customers.
Background
The Centers for Medicare and Medicaid Services (CMS) has set a threshhold a 10% rate increase as the marker to decide whether to look more closely at individual and small group health insurance rate hikes in states.
The 10% increase will apply to both types of states --- those where CMS handles rate reviews and in states that do the reviews themselves, officials say.
CMS, an arm of the U.S. Department of Health and Human Services (HHS), will begin to apply the review program rules Sept. 1. Beginning in September 2012, each state will get its own review threshold, officials say.
GAO's Viewpoint
John Dicken, a director at the U.S. Government Accountability Office (GAO), testified that state regulation of health insurance premiums has been spotty in the past but that HHS rate review grants are now helping 41 states make changes designed to improve their oversight of health insurance premium rates.
Dicken testified that:
48 out of the 50 states that responded to a recent GAO survey said they reviewed rate filings in 2010. 38 states reported that in 2010 all rate filings reviewed were reviewed before the rates took effect; other respondents reported reviewing at least some rate filings after they went into effect.
About half of the states are using federal grants to look at existing rate review processes or develop new processes. More than two-thirds of the states said they have begun to make changes to increase their capacity to oversee premium rates, including hiring staff or outside actuaries, and improving the information technology systems used to collect and analyze rate filing data.
