The federal government will not have the authority to reject the rate increases. But an HHS official said Tuesday morning it will help states review premium hikes and then highlight any deemed unreasonable. Insurers will then be asked to submit a final justification for them.
The official, who spoke on the condition of anonymity because HHS had not released its announcement on the new rule, said the theme of the new rule is disclosure. If an increase is deemed unreasonable, the finding would be posted on websites for HHS and the insurer.
States that have a rate review in place will scrutinize the hikes. If they don’t review rates, then HHS will examine them to determine whether they are unreasonable.
"The reg does not interfere with state law," the official said. "It simply sets up a process by which rate increases and the underlying data . would be filed and publicly disclosed."
This rule only affects policies sold in the individual and small group markets.
Steep hikes in those markets have been a hot topic since early this year, when reports of Anthem Blue Cross raising rates as much as 39 percent in California helped reignite stalled health care overhaul legislation. The insurer later withdrew the increase, and state regulators wound up approving an average rate increase of 14 percent for Anthem Blue Cross, a WellPoint Inc. subsidiary.
That initial hike, which averaged 25 percent, drew criticism from an Obama administration that questioned how increases like that could be justified while WellPoint was reported multibillion-dollar profits. WellPoint and other insurers have pointed to the rising cost of medical care and high unemployment _ not corporate greed _ as the main factors behind their price hikes.
More recently, Connecticut regulators rejected a request from another WellPoint subsidiary, Anthem Blue Cross and Blue Shield, for a 20 percent rate increase.
A total of 29 states plus Washington, D.C., require insurers to get approval before they use their rates, according to the National Association of Insurance Commissioners. Another 11 states have "file and use" rules in place. That means the insurer can file and use the rates after a waiting period, but regulators can reject the rates during that waiting period or after.