Health and Human Services Secretary Kathleen Sebelius has written a letter to AHIP President and CEO Karen Ignagni chastising the insurance lobby for blaming the recent insurance premium increases on the early benefits in the health care law — provisions that “were fully supported by AHIP and its member companies,” the letter points out.
Noting that “any potential premium impact from the new consumer protections and increased quality provisions under the Affordable Care Act will be minimal,” Sebelius also warns AHIP that the federal government will not sit idly by as insurers blame the health care law for the premium increases:
Moreover, I want AHIP’s members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections.
Already my Department has provided 46 states with resources to strengthen the review and transparency of proposed premiums. Later this fall, we will issue a regulation that will require state or federal review of all potentially unreasonable rate increases filed by health insurers, with the justification for increases posted publicly for consumers and employers. We will also keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014. Simply stated, we will not stad idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.
Indeed, the rate review grants should help sates review unreasonable increases, but there is very little the federal government can actually do to reign in unreasonable rates; that burden falls to the states. And, given the influence of insurers on some state commissioners and the weak state regulatory structure — 23 states do not review and approve premium changes in the individual market and 5 of those 23 have no rate regulations at all — it’s clear that the federal government needs to find new ways to entice the states to strengthen their rate review processes.
Absent passing some kind of federal rate review legislation, HHS can attach thicker and longer strings to the next round of rate review grants. For instance, it can require that states adopt a strict prior review process that would give regulators the authority to deny “unreasonable” increases. That would encourage states to pass additional legislation (no easy task) but given the amount of interest in the first round of rate review dollars, those kind of conditions could at least spark legislative activity in the right direction. Obviously the feds could target the next round of rate review grants “to states that appear the most promising in terms of greater rate review, oversight, and enforcement,” Edwin Park, co-director of health policy at the Center on Budget and Policy Priorities told me in an email. “This would include not only states with an existing robust process but those states needing the most help but also the most willing to institute strong rate reviews.”
Park says that the federal government can also make it easier to conduct reviews by purchasing systems, establishing common procedures, and help states find actuaries to review insurance rates.
Finally, the federal government can work very closely with the states to ensure that insurers with unreasonable increases between now and 2014 are actually excluded from the exchanges and states can of course keep inefficient and costly issuers out of the exchanges.
The Hill has Ignagni’s response:
“Health insurance premiums are increasing because of soaring prices for medical services, the impact of younger and healthier people dropping their insurance during the weak economy, and additional benefits required under the new law,” AHIP President and CEO Karen Ignagni responded in a statement. “The new health care reform law mandates that health insurance coverage include a wide range of new benefits beyond what many families and small businesses previously purchased. It’s a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before. Health plans will continue to do everything they can to incorporate all of these new benefits while keeping health care coverage as affordable as possible for families and employers.”