WASHINGTON--(BUSINESS WIRE)--U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today announced Affordable Care Act grant awards of $3,000,000 to Hawaii that will help fight unreasonable premium increases and protect consumers. Today, HHS also released a new report entitled Rate Review Works detailing how previous rate review grants are fighting premium hikes and helping make the health insurance marketplace more transparent.
“We’re committed to fighting unreasonable premium increases and we know rate review works,” said Secretary Sebelius. “States continue to have the primary responsibility for reviewing insurance rates and these grants give them more resources to hold insurance companies accountable.”
As of September 1, 2011, the Affordable Care Act requires health insurers seeking to increase their rates by 10 percent or more in the individual and small group market to submit their request to experts to determine whether the rates are unreasonable. The Affordable Care Act also requires insurance companies to publicly justify unreasonable premium rate increases. These provisions will bring greater transparency, accountability, and, in many cases, lower costs for families and small business owners who struggle to afford coverage.
The Affordable Care Act provides States with $250 million in Health Insurance Rate Review Grants, $48 million of which has previously been awarded to 42 States, the District of Columbia and five territories. As outlined in the new report, these grants and other State rate review efforts are already making a difference in Hawaii. Prior to receiving grant funds, Hawaii processed a mix of paper and electronic rate filings. Through the use of the System for Electronic Rate and Form Filing, the Insurance Division is preparing to collect all rate filings electronically. Two new full-time staff members, a rate and policy analyst and an actuary, will manage the increased volume of incoming rate filings.
The grants awarded today help to create a more level playing field by improving how States review proposed health insurance rates and holding insurance companies accountable for disclosing information about unjustified rate increases.
Hawaii is proposing to use Cycle II grant funds in the following ways:
- Improve rate filing requirements: Hawaii will provide consumers with access to Parts I and II of the preliminary justifications required by the federal rate review regulation. Part I provides consumers with a standardized web-based consumer disclosure form that helps them understand the reasons for proposed rate increases. Part II provides consumers with a brief, non-technical consumer oriented written explanation of the rate increase, intended to provide context for the quantitative information provided in Part I.
- Improve transparency and consumer interfaces: Hawaii will also enhance its Insurance Division's website to improve transparency with respect to the rate process, including making a history of rate actions by the Division and access to Parts I and II of the preliminary justifications required by the rate review regulation available to consumers. The Insurance Division will also receive public comments through letters or email.
- Hire new staff: Hawaii will create 4 new positions with Cycle II resources.
- Improve IT: Hawaii will enhance its Insurance Division's website to improve transparency with respect to the rate process, including making a history of rate actions by the Division and access to Parts I and II of the preliminary justifications required by the rate review regulation available to consumers. The Insurance Division will also receive public comments through letters or email. Hawaii is also considering a number of other related IT initiatives to enhance the collection and analysis of rate filing and other relevant health care data, such as claims data.
A summary of how each State will use the new resources can be found in the report released today.
“The proposals from the States overwhelmingly demonstrate the need, and desire, for new resources and tools to hold insurance companies accountable,” said Steve Larsen, Director of the Center for Consumer Information and Insurance Oversight. “Thanks to the Affordable Care Act, States will have more of the tools they need to crack down on insurance companies that want to pass unreasonable premium hikes on to hard working families.”
Information about significant State achievements with previous rate review grants can also be found in the report.
Rate review builds on other provisions in the Affordable Care Act to help make health insurance more affordable for individuals, families, and businesses. Other steps the law takes to help make insurance more affordable include:
- Insurers are generally required to meet a medical loss ratio standard to spend at least 80 percent of premium dollars on health care and quality-improvement activities as opposed to overhead, advertising, and executive bonuses. Insurers that fail to meet that standard must either reduce premiums or pay rebates to consumers and employers;
- Small businesses are eligible for Federal tax credits of up to 35 percent of the cost of coverage for their workers. That amount rises to 50 percent by 2014; and
- In 2014, the Affordable Insurance Exchanges will use competition and transparency, including information on excessive or unjustified premium increases, to help make insurance more affordable.
The Affordable Care Act includes a variety of provisions designed to promote accountability, affordability, quality, and accessibility in the health care system for all Americans, and to make the health insurance market more consumer-friendly and transparent. Some of the provisions are already in effect, including prohibitions on pre-existing condition exclusions for children; prohibitions on lifetime dollar limits in all health plans; extended access to insurance for many young adults; and an unprecedented level of transparency about health insurance through www.HealthCare.gov.
For the full Rate Review Works report, please visit: http://www.healthcare.gov/law/resources/reports/rate-review09202011a.pdf
For a fact sheet on the awards announced today, please visit: http://www.healthcare.gov/news/factsheets/2011/09/rate-review09202011a.html
Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.