News & Events

This is health reform? Insurers posting gigantic profits.

Note that this new HHS rule requires health insurers to EXPLAIN their looting of our healthcare dollars (later, down the road).

It doesn’t forbid it, it doesn’t regulate it, it doesn’t serve the public interest.

 – Mary Crotty RN JD
Massachusetts Nurses Association

HHS rule requires insurers to explain large premium increases

By Gregg Blesch
Posted: May 19, 2011 – 11:30 am ET

HHS issued a final rule requiring health insurers to explain large premium increases.

The regulation, stemming from the Patient Protection and Affordable Care Act, means the proposed rate increase of 10% or more for individual and small-group plans must be reviewed by state or federal officials beginning in September.

Beginning in 2012, the 10% threshold will be replaced by ones reflecting the insurance and healthcare cost trends in each state.

States are generally expected to exercise the new authority, and HHS has awarded states $44 million in grants to support their capabilities to do so.

An additional $200 million for such grants is available under the reform law. HHS, however, will carry out the reviews for states that are unable to do so.

The final rule (PDF) issued today follows proposed regulations published in December for public comment.

America’s Health Insurance Plans, the trade group for the country’s largest insurers, issued a statement at the time saying increasing healthcare costs are driving premium hikes. “While the proposed rule gives consideration to the impact of rising medical costs, it also establishes a threshold for review that is incomplete because it does not adequately factor in all of the components that determine premiums, including the cost of new benefit mandates and the impact of younger and healthier people dropping coverage,” AHIP President and CEO Karen Ignagni said in the statement.

In a news release, HHS asserts that the oversight is needed because insurers are making record profits while premiums increase faster than medical costs.

“Rate review will ensure that increases are based on reasonable estimates and real-time data on medical cost trends and healthcare utilization,” Steve Larsen, director of HHS’ Center for Consumer Information and Insurance Oversight, said in the release.