Premium Rate Review

Overview HCAN’s Work More Resources


Health insurance premiums have skyrocketed 131% over the last 13 years. In fact, the cost of health insurance is growing approximately three times faster than wages. The high cost of health insurance makes insurance unaffordable for too many individuals and small businesses.

Insurance regulators can review – and sometimes deny – excessive premium increases using a process called rate review. Rate review has traditionally been done at the state level, but the Affordable Care Act (ACA) added an important federal backstop to make sure the process is more than just a rubber stamp for premium hikes.

Under the ACA, every premium rate increase in the individual and small group market greater than 10% must be reviewed by the state insurance commissioner. In states where the insurance commissioner doesn’t have the authority to review insurance rates, the federal Department of Health and Human Services (HHS) will perform the review. Find out which health plans are under review in your state.

The ACA also provided grant funding to states to bolster their ability to do a thorough review of the rates submitted by insurers. In 2010, 42 states, DC and five territories were awarded $1 million each to improve rate review. In September 2011, 28 states and DC were awarded an additional $109 million in rate review funding.

Rate Review Laws
HHS evaluated each state’s premium review laws and practices to determine whether or not they had the authority to do a competent job on rate review. In all, 44 states were found to have effective review in at least one insurance market. A table of the states with and without effective rate review can be found here.

HCAN’s Work on Premium Rate Review

We organize at the grassroots around all of our priority issues in order to move policymakers and build public support. Our work on Capitol Hill is also key to our effort; please see below for examples of that work and relevant documents.

HCAN partners have worked to improve rate review in their states. In 2011:

  • In Nevada, advocates won rate review protections for health plans sold to small businesses.
  • Oregon advocates presse d for a more consumer-friendly website to explain insurance rates and for public hearings on rate increases.
  • Washington advocates championed legislation to make insurance rate filings more transparent.

Rate Review Successes
When done right, rate review can be an important tool to bring down premiums and keep insurers honest.

  • In 2010, Connecticut’s insurance commissioner denied a 20% proposed rate increase by Anthem Blue Cross and Blue Shield.
  • North Dakota’s insurance commissioner chopped nearly 10% off a proposed rate increase that would have raised premiums for 30,000 Blue Cross Blue Shield of North Dakota customers.
  • California’s insurance commissioner turned obscene rate increases into a public battle in 2010, protecting consumers from rate increases as high as 87% by Blue Shield of California.

Improving Rate Review at the State Level
The standards for review vary by state. Some states use bare-minimum criteria to ensure plans meet solvency standards, whereas other states actively scrutinize rates to protect consumers from unjustified increases. In some states, insurers’ rate filings are made after the rate has already been implemented by the company, but in at least 22 states, states must approve or deny increases.

It’s important to continue to improve rate review laws in the states. For example, in your state you can:

  • Require insurance companies to have their rates approved and give insurance commissioners the ability to block a rate hike.
  • Require insurers to submit comprehensive data to back-up rate hike requests and make that data public.
  • Increase consumer engagement by requiring public hearings on rate increases.

See HCAN’s Rate Review Checklist for more recommendations.

Improving Rate Review at the Federal Level
Only 22 states require prior approval of rate increases, leaving millions of consumers vulnerable. And when HHS conducts rate review in place of a state, it can label an increase as unreasonable but lacks the authority to block it.

Senator Dianne Feinstein (D-CA) and Representative Jan Schakowsky (D-IL) have introduced the Health Insurance Rate Review Act, S. /H.R. , to give the HHS Secretary the authority to block or modify unreasonable rate increases. HCAN strongly supports this legislation.

HHS Regulations
In May 2011, HHS finalized its rules to implement the federal backstop on rate review.

HCAN comments on rate review interim final rule

In July 2011, HCAN led a successful effort to require “association health plans” to be included in the rate review process. Without scrutiny, these plans would continue to insure the healthiest people and use price discrimination to dump the sick.

Comments from HCAN and 23 consumer groups on association health plans

More Resources