$46 Million in Grants to Help States Crack Down on Unreasonable
Health Insurance Premium Hikes
45 States and the District of
Columbia to Receive $1 Million Each to Make Health Insurance Markets
More Consumer-Friendly and Transparent
HHS Secretary Kathleen Sebelius today announced grant awards of
$46 million to 45 States and the District of Columbia. These
Affordable Care Act grants will be used to help improve the
oversight of proposed health insurance premium increases, take
action against insurers seeking unreasonable rate hikes, and ensure
consumers receive value for their premium dollars.
For too long, insurance companies in many States have increased
health insurance premiums with little oversight, transparency, or
public accountability. Health insurance premiums have doubled on
average during the last 10 years, much faster than wages and
inflation, putting health coverage out of reach for millions of
Americans and business owners. Today, just 26 States and the
District of Columbia have the authority to reject a proposed
increase that is excessive, lacks justification or otherwise exceeds
State standards. Many States that have the authority lack resources
to exercise it meaningfully. This lack of authority and resources
for States has unfortunately contributed to unjustified premium
increases in some States.
“The Affordable Care Act puts in place critical market reforms to
improve quality and reduce the cost of health care for employers and
individuals. Increased competition, lower insurance overhead, and
better risk pooling in health insurance Exchanges in 2014 are
expected to reduce premiums in the individual market by anywhere
from 14-20 percent according to the Congressional Budget Office,”
said Secretary Sebelius. “Between now and then, we will continue to
work with States to ensure consumers are receiving value for their
premium dollars and to avoid the kind of double digit premium
increases seen recently. The State proposals approved today
demonstrate the need and desire for new resources and tools to help
them protect against unjustifiable premium increases.”
The Affordable Care Act provides States with $250 million in
Health Insurance Premium Review Grants over five years to help
create a more level playing field by improving how States review
proposed health insurance premium increases and holding insurance
companies accountable for unjustified premiums increases.
Applications for the first round of Health Insurance Premium Review
Grants were made available on June 7.
The grants build on the Obama Administration’s work with States
to implement the Affordable Care Act. Earlier this year, Secretary
Sebelius called on certain insurance companies to justify large
premium increases and encouraged State and local officials to obtain
stronger health insurance premium review authorities under State
laws. This increased scrutiny by the Administration and by several
States has led to the withdrawal or reduction of several proposed
health insurance premium increases that in some cases turned out to
be based on faulty assumptions and data.
States have proposed to use this funding in a variety of
ways.
- Additional Legislative Authority: 15 States and the
District of Columbia will pursue additional legislative authority
to create a more robust program for reviewing or requiring
advanced approval of proposed health insurance premium increases
to ensure that they are reasonable;
- Expand the Scope of Health Insurance Premium Review: 21
States and the District of Columbia will expand the scope of their
current health insurance review, for example by reviewing and
requiring pre-approval of rate increases for additional health
insurance products in their State.
- Improve the Health Insurance Premium Review Process:
All 46 State grantees will require insurance companies to report
more extensive information through a new, standardized process to
better evaluate proposed premium increases and increase
transparency across the marketplace;
- Make More Information Publicly Available: 42 States and
the District of Columbia will increase the transparency of the
health insurance premium review process and provide
easy-to-understand, consumer friendly information to the public
about changes to their premiums; and
- Develop and Upgrade Technology: All State grantees will
develop and upgrade existing technology to streamline data sharing
and put information in the hands of consumers more
quickly.
“States will use these grant dollars in the way that makes the
most sense for their insurance consumers,” said Jay Angoff, Director
of the Office of Consumer Information and Insurance Oversight. “As
we continue to implement the new health insurance reform law, we
will continue to work with States to ensure they have the tools they
need to ensure the stability of the marketplace, keep costs low and
provide consumers with increased transparency, choice and quality
they need to make the best health care decisions for their
businesses and families.”
A chart summarizing how each State will use the new resources can
be found at http://www.healthcare.gov/news/factsheets/rateschart.html.
The Health Insurance Premium Review Grants are one element of a
broad effort under the Affordable Care Act to reduce the
unreasonable premium increases proposed by some insurers today.
Additional resources from this $250 million program will be
available in subsequent years to further strengthen State health
insurance premium review procedures. Other statutory provisions
designed to improve affordability include:
- In 2011, the Affordable Care Act allows the Secretary of the
U.S. Department of Health and Human Services to review
justifications for unreasonable increases in premiums and make
them public;
- In 2011, insurers will generally be required to spend at
least 80 percent of premium dollars on medical care services
and quality-improvement activities and limit their spending on
overhead, marketing, CEO salaries, and profits; and
- 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.
The Affordable Care Act includes a wide variety of provisions
designed to promote a high-quality, high-value, health care system
for all Americans and to make the health insurance market more
consumer-friendly and transparent. Some of the provisions that take
effect by the end of next year, or are already in effect, include
prohibitions on pre-existing condition exclusions for children;
prohibition 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.
To read more about the grants, visit http://www.healthcare.gov/news/factsheets/rates.html.
To read more about how each State will use its grant funding,
visit http://www.healthcare.gov/center/grants/index.html.
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Note: All HHS press releases, fact sheets and other press
materials are available at http://www.hhs.gov/news.
Last revised: August 16,
2010
U.S. Department of Health & Human Services - 200 Independence Avenue,
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