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Improved rate review bring better transparency to health insurance markets

Thursday, December 20, 2012

Consumers Union: Improved Rate Review Standards Bring Better Transparency to Health Insurance MarketsNew Rules for a Single Risk Pool will Improve Consumers’ Health Plan Options

WASHINGTON, D.C. – Consumers Union, the policy arm of Consumer Reports, today praised the U.S. Department of Health and Human Services’ (HHS) proposed rule to promote fair insurance premiums for the entire individual market beginning in 2014.

The group commended the proposal, which would require insurers to submit a justification for all insurance rate increase requests, in comments concerning Health Insurance Market Rules and Rate Review at with HHS today. Currently, only requests for premium increases of 10% or more are required to be approved by states with rate review procedures meeting certain standards and by HHS for states that do not have such standards.

“This proposal brings an important, standardized level of oversight and transparency to the rate review process,” said Laurie Sobel, senior staff attorney for Consumers Union. “For example, we will now be able to see how many companies were trying to bend the rules by routinely filing for 9.99% increases. This move would allow HHS to truly monitor all rate increases which impact consumers, rather than just a portion of it.”

The proposed rule contains other important new benefits, including a requirement that insurers “pool together” enrollees across their entire market. Today, insurers are typically allowed to set premiums based on a subset of enrollees, which means that high cost enrollees can be pooled together, driving up premium costs instead of spreading them more broadly. Known as the “single risk pool” requirement, these new rules will help level and stabilize premiums for consumers, making the pricing more fair.

But the consumer group emphasized that additional factors needed to be taken in to consideration when determining whether a rate increase is justified. The comments urged regulators to consider the effect and hardship of the rate increases on consumers, as well as the company’s history of rate increases and the balance of company solvency against affordability for consumers.

Sobel said, “To ensure that consumers are truly protected from unfair rate increases, there needs to be more of a balance in the equation between the best interests of the company and the best interests of consumers.”

Consumers Union also recommended requiring each state to provide information about rate filing in multiple languages to reflect those languages available on the state’s exchange consumer portal or the federal exchange portal for the state.

Sobel said, “Every consumer deserves access to rate filing information and the right to be involved in the process and make their voice heard, no matter what their primary language. That’s why it’s critical that states provide this information in the languages that consumers use to shop the exchanges.”

For a copy of the full comments, visit consumersunion.org/health