Regulation Issued by HHS Today Should Require Insurers to Justify Every Double-Digit Health Insurance Rate Hike Since Health Reform Was Enacted

Prior Approval of Rate Hikes In All States Still Needed, Says Consumer Watchdog

WASHINGTON, Dec. 21, 2010 /PRNewswire-USNewswire/ -- Consumer Watchdog called on the Obama administration to subject all health insurance rate increases imposed since the approval of the health reform law to new regulations issued by HHS today. The new rule requires public justification and review of any health insurance rate increase of 10% or greater.

The group also said the regulation must be strengthened to require public disclosure of all the predictions and actuarial assumptions made by insurance companies to justify rate increases of 10% or higher. The regulation as drafted would allow insurers to keep secret many details of rate calculations.

The basis of the new regulation is section 2794 of the federal health reform law, which expressly provided that, beginning with the 2010 plan year, health insurance companies cannot raise insurance premiums until insurers "submit to the Secretary and the relevant State a justification for an unreasonable premium increase prior to the implementation of the increase."

"Consumers have faced double-digit premium increases for the past year as insurance companies raced to jack up prices in advance of reform," said Carmen Balber, director of Consumer Watchdog's Washington D.C. office. "HHS must require public justification of those rate hikes as the law requires. The regulation should also be strengthened to ensure consumers get full disclosure of all the claims about costs and spending that insurance companies are making to justify those hikes."

Consumer Watchdog noted that the regulation does not require approval of all health insurance rates before they take effect, and urged states to enact prior approval rate regulation legislation.

"The new rules rely on public disclosure to shame insurance companies into charging consumers fairer prices, and this symbolic stoning may work to hold down increases in some cases. However, regulators must ultimately have the power to modify and deny premium increases in order to prevent insurers from imposing unreasonable premium increases on consumers," said Balber.

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog