PPACA Regulating Insurance Premiums

Kathleen Sebelius has sent out an announcement discussing the $250 million PPACA provides to states to monitor and review insurance rate hikes. It's an excellent foil to the Medical Loss Ratio requirements, as insurers now have to think twice about upping premiums to boost their profit volume. It's also the foundation and a beautiful prelude to the exchanges, where bad faith actors will be shut out of the market. There's a really groovy widget-thingy at healthcare.gov you can play with; it's basically a timeline of when the different parts of PPACA go into effect. Here is what it says about the oversight grant money:
The law allows states that have, or plan to implement, measures that require insurance companies to justify their premium increases to be eligible for $250 million in new grants. Insurance companies with excessive or unjustified premium increases may not be able to participate in the new health insurance Exchanges in 2014.
And here is additional information from Sebelius' announcement this morning:
The Affordable Care Act has already begun to help states strengthen or create rate review processes. On August 16, HHS awarded $46 million to 45 states and the District of Columbia to help them improve their oversight of proposed health insurance rate increases. ...Today’s proposed regulations will build on these efforts by requiring insurers in all states to publicly justify any unreasonable rate increases beginning in 2011. In 2011, proposed rate increases of 10 percent or higher will be publicly disclosed and thoroughly reviewed to determine if the rate increase is unreasonable. After 2011, state-specific thresholds would be set using data and trends that better reflect cost trends particular to each state. Insurance company’s justifications for unreasonable increases will be posted on HealthCare.gov and the insurance plan’s website. ...Under the proposed regulation, states with effective rate review systems would conduct the reviews. If a state lacks the resources or authority to do thorough actuarial reviews, HHS would conduct them. Meanwhile, HHS will continue to make resources available to states to strengthen their rate review processes. In 2014, the Affordable Care Act empowers states to exclude health plans that show a pattern of excessive or unjustified premium increases from the new health insurance exchanges.
I especially like how 2011 will be used as a calibration point of sorts, with these reviews forming the basis for state-specific premium models and controls. The part about HHS conducting the reviews for states that can't was also particularly delicious; it no longer matters if a state doesn't have its own insurance commissioner or other oversight. It also complements state regulation, not supplants it, i.e., it bolsters states that don't have adequate oversight but leaves states that do alone. But they still have to meet HHS requirements.

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