Reform implementation in the states rolls on: this week, insurance premium reviews

[Greenbeard]

As I've mentioned before, the health reform law explicitly empowers and encourages states to review premium rate increases by insurers to ensure that they're reasonable, given the current financial situation facing the insurer. At the very least, unreasonable rate increases prior to the opening of the exchanges in 2014 may get an insurer barred from operating in the exchanges. In addition, many states are already authorized to review and approve rate hikes (or are about to authorize themselves to do so). Here's the relevant chunk of the law:

`SEC. 2794. ENSURING THAT CONSUMERS GET VALUE FOR THEIR DOLLARS.

`(a) Initial Premium Review Process-

`(1) IN GENERAL- The Secretary, in conjunction with States, shall establish a process for the annual review, beginning with the 2010 plan year and subject to subsection (b)(2)(A), of unreasonable increases in premiums for health insurance coverage.
`(2) JUSTIFICATION AND DISCLOSURE- The process established under paragraph (1) shall require health insurance issuers to submit to the Secretary and the relevant State a justification for an unreasonable premium increase prior to the implementation of the increase. Such issuers shall prominently post such information on their Internet websites. The Secretary shall ensure the public disclosure of information on such increases and justifications for all health insurance issuers.​

`(b) Continuing Premium Review Process-

`(1) INFORMING SECRETARY OF PREMIUM INCREASE PATTERNS- As a condition of receiving a grant under subsection (c)(1), a State, through its Commissioner of Insurance, shall--

`(A) provide the Secretary with information about trends in premium increases in health insurance coverage in premium rating areas in the State; and
`(B) make recommendations, as appropriate, to the State Exchange about whether particular health insurance issuers should be excluded from participation in the Exchange based on a pattern or practice of excessive or unjustified premium increases.​

`(2) MONITORING BY SECRETARY OF PREMIUM INCREASES-

`(A) IN GENERAL- Beginning with plan years beginning in 2014, the Secretary, in conjunction with the States and consistent with the provisions of subsection (a)(2), shall monitor premium increases of health insurance coverage offered through an Exchange and outside of an Exchange.
`(B) CONSIDERATION IN OPENING EXCHANGE- In determining under section 1312(f)(2)(B) of the Patient Protection and Affordable Care Act whether to offer qualified health plans in the large group market through an Exchange, the State shall take into account any excess of premium growth outside of the Exchange as compared to the rate of such growth inside the Exchange.​

`(c) Grants in Support of Process-

`(1) PREMIUM REVIEW GRANTS DURING 2010 THROUGH 2014- The Secretary shall carry out a program to award grants to States during the 5-year period beginning with fiscal year 2010 to assist such States in carrying out subsection (a), including--

`(A) in reviewing and, if appropriate under State law, approving premium increases for health insurance coverage; and
`(B) in providing information and recommendations to the Secretary under subsection (b)(1). [...]​

As I mentioned, in some states this builds on existing rate review structures in place in the state (for example, in 26 states and D.C. rate hikes can be rejected by state officials; other states require insurers to report rate hikes but have no authority to modify or reject them).

Yesterday, the first of those premium review grants went out to 45 states and Washington, D.C. Here's how various states indicated in their grant proposals that they'll be using the award:

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 reasonable;
• 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 requiring pre-approval of 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; and
• 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.

If you want to go state-by-state to see what individual states can do right now and what they intend to use their grant money to do, you can do that here.