California Nabs $4.3M To Bolster Scrutiny of Health Insurance Rates
On Tuesday, HHS awarded $109 million in grants to 28 states and Washington, D.C., to help officials bolster the oversight of insurance rates, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 9/20).
The agency in December 2010 issued preliminary regulations mandated by the federal health reform law that require health insurers to disclose and justify any premium increases of 10% or more beginning in 2011. The rules stipulate that states must either review rate increases of 10% or more beginning in July or allow HHS to assess them instead. HHS in February awarded $199 million in federal grants to help states augment the process (California Healthline, 2/25).
In the second round of funding, each of the states and D.C. received $3 million. Of those, the 20 states that have the legal authority to block proposed rate increases each received an additional $600,000, National Journal reports (McCarthy, National Journal, 9/20).
HHS Secretary Kathleen Sebelius said the funds will "bring more transparency to the market" (Zigmond, Modern Healthcare, 9/20). She added, "In the past, insurance companies often jacked up people's rates without rhyme or reason. Now it's a lot harder to do. So today we're sending a clear message to insurance companies that the days of unjustified double-digit rate increases are over" (National Journal, 9/20).
Also on Tuesday, the agency released a report listing the grant recipients, how each state has used its first cycle of funding and future proposals to continue improving the rate-review process (Modern Healthcare, 9/20).
Details of California Funding
California received two grants because insurance oversight is shared between the state's Department of Insurance and the Department of Managed Health Care (Levey, Los Angeles Times, 9/20).
Insurance Commissioner Dave Jones (D) said that the state will receive about $4.3 million, which includes $1.24 million distributed to states with bigger workloads. Jones noted California is ineligible for an additional $600,000 because the state lacks "prior approval" authority to reject proposed health insurance rate increases.
Jones said, "I'm more determined than ever to see that the California Legislature pass and the governor sign AB 52, which would give California the authority to reject excessive rate increases."
CDI will use the funding it received toward efforts that include:
- Expanding the scope of rate reviews and shortening the time it takes to review rates; and
- Offering grants to consumer advocacy organizations to examine rate filings and report comments to the department (CDI release, 9/20).
AHIP Criticizes Rate Reviews
America's Health Insurance Plans has criticized the Obama administration for focusing on premium increases rather than addressing increasing health care costs, "Healthwatch" reports ("Healthwatch," The Hill, 9/20).
In a blog post, AHIP officials wrote, "The current focus on rate review ignores the soaring cost of medical care that is driving up the cost of coverage and taking up a greater and greater share of federal and state budgets" (Modern Healthcare, 9/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.