Health insurance rate hikes cry out for regulation

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Janet Adamy in the Wall Street Journal reports (subscription necessary) that health insurers across the country are using the health reform law as an excuse to justify their latest round of rate hikes for individual insurance policies.

Aetna, one of the nation’s largest health insurers, said the extra benefits forced it to seek rate increases for new individual plans of 5.4% to 7.4% in California and 5.5% to 6.8% in Nevada after Sept. 23. Similar steps are planned across the country, according to Aetna.

Regence BlueCross BlueShield of Oregon said the cost of providing additional benefits under the health law will account on average for 3.4 percentage points of a 17.1% premium rise for a small-employer health plan. It asked regulators last month to approve the increase.

In Wisconsin and North Carolina, Celtic Insurance Co. says half of the 18% increase it is seeking comes from complying with health-law mandates.

The White House says insurers are using the law as an excuse to raise rates and predicts that state regulators will block some of the large increases.

"I would have real deep concerns that the kinds of rate increases that you’re quoting… are justified," said Nancy-Ann DeParle, the White House’s top health official. She said that for insurers, raising rates was "already their modus operandi before the bill" passed. "We believe consumers will see through this," she said.

But White House skepticism isn’t enough to protect consumers from unjustified rate hikes.

As recent experience in California shows, health insurers’ cost assumptions and medical trend numbers need close scrutiny if we expect to separate legitimate cost increases from industry smoke and mirrors.  Only an in-depth actuarial review uncovered the supposed "mathematical errors" that forced Aetna and Anthem to withdraw proposed rate hikes in California.

Strong "prior approval" regulation of health insurance rates gives state
regulators the power to dig into the numbers and make insurers prove
their claims. If insurers’ rates can’t be justified, state regulators must be able to reject them before they go into effect. Currently, state regulators’ ability to reject rate hikes varies widely from state to state.

As the date approaches when every American will be required to prove they have health insurance, regulators have to step up to the plate – even where it means seeking new legal and regulatory authority – to scrutinize insurance companies’ claims and ensure that consumers aren’t being gouged.

Consumer Watchdog
Consumer Watchdog
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