HHS Issues Proposed Rules Requiring Healthcare Insurance Increase Disclosure

The Department of Health and Human Services (HHS) has issued proposed regulation that – thanks to the Patient Protection and Affordable Care Act – would obligate health insurers to provide additional information about rate increases.  Beginning in 2011, insurers who raise rates by 10 percent in the individual and small group markets would have to publicly disclose the increase and justify their reasoning. Additionally, HHS wants state-specific thresholds to be set for rate disclosure in 2012, “using data and trends that better reflect cost trends in that particular state.”

Summaries of the 10 percent or greater reviews would be posted on the HHS website; insurers seeking these increases would be required to post their justifications on their corporate websites.  Evidence “suggests that the majority of increases in the individual market have exceeded 10 percent each year for the past three years,” greatly surpassing national measures of cost inflation, according to HHS.   After a public comment period, the final rules will be issued in approximately six months.

Not surprisingly, America’s Health Insurance Plans (AHIP), the insurance industry’s lobbying group, argues that the proposed rules don’t account for new benefit mandates and the recession.  “For example, data from the state of Oregon show that prices of many medical services have increased at an average annual rate exceeding 10 percent,” says AHIP CEO Karen Ignagni.  “California data show that prices for a hospital stay increased by more than 150 percent between 2000 and 2009 — an average annual growth rate of 11 percent.  Trends like these are being seen across the country.”

Consumer advocates, on the other hand, contend that the proposed rules are not strong enough.  “The whole point of this regulation, as the HHS secretary has said, is to shine a light on the actuarial assumptions…in the hope that public scrutiny will shame insurers into doing the right thing,” says Carmen Balber, director of Consumer Watchdog in Washington, D.C.. “If full data is not disclosed, in many cases we’re left with the status quo.”

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