The New York Times reported today that health insurance companies in New York are fighting to keep the reasons for insurance rate hikes secret. State insurance regulators have demanded the companies open their books to the public. In typical form, insurers are challenging the rule. New York’s financial services superintendent got it just right when he told the Times:

How these companies are setting these rates is vital for the public to know, and should not be treated like a state secret. Transparency will promote healthy competition and enable the public to rigorously comment on proposed rates, two goals that all of us should favor.

New York should be applauded for standing up to the industry and insisting on transparency, but consumers across the country aren’t so lucky. This is the sort of secrecy insurance companies want in every state, and lots of state insurance regulators routinely give in to health insurer pressure to keep information hidden.

As just one example, Indiana, Iowa, Louisiana, Nevada, and Utah attempted, at the request of the insurance industry, to keep information about insurer profits, surplus, premiums, deductibles and other details confidential. They carried this water for insurers in documents the states submitted this year to the Department of Health and Human Services arguing for waivers to the health reform law.

The information that health insurers are trying to hide is exactly the info that consumers need to determine if they’re paying a fair price for insurance. Insurers are afraid that opening their books to the light of day will make it too easy for the public to discover that double-digit rate hikes can’t be justified.

Federal health reform regulations – that right now let states decide whether information has to be public – must be updated to require full information about rate hikes is disclosed in every state.  If insurance companies won’t be transparent, they shouldn’t be allowed to raise rates.

Ultimately however consumers won't be protected from unreasonable rate increases through bad publicity alone. State insurance regulators need the kind of prior approval authority New York regulators have to reject excessive rate hikes.

Prior approval rate regulation gives regulators the power to reject or modify any rate increase that is excessive or unjustified after insurance companies have opened their books and explained their reasons for the rate increase request. Prior approval is necessary to turn this disclosure into rules with teeth.

One example of mere disclosure failing to protect consumers: A California insurer was able to increase rates by 14% this spring, despite a finding by state regulators that the increase was unreasonable, because California regulators do not have the power to modify or reject excessive health insurance rate increases. In contrast, a California law (Prop 103) requiring prior review and approval of automobile and other property insurance rate increases has saved drivers $62 billion since 1998, according to the Consumer Federation of America.

We’ve learned the hard way that disclosure and review won’t shame insurance companies into doing the right thing. States can’t stop insurers from imposing year after year of unjustified double-digit increases without the power to reject unreasonable hikes before they take effect.