U.S
Department of Health and Human Services (HHS) Secretary Kathleen
Sebelius today announced Affordable Care Act grant awards of $4,312,084
to Pennsylvania 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 Pennsylvania. The
Pennsylvania Department of Insurance created a Rate Level Index
Database to internally house and further analyze all rate filings. The
Department used grant funds to create consumer comparison charts and
post rate filings on its website.
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.
Pennsylvania is proposing to use Cycle II grant funds in the following ways:
· Introduce legislation: Pennsylvania plans to acquire authority over commercial small group rates through legislation.
· Expand scope of rate review: Pennsylvania plans to acquire authority over commercial small group rates by modifying Act 159.
· Improve rate filing requirements:
Pennsylvania proposes building the framework for an enhanced rate
review process by contracting with actuarial and other expertise, and
acquiring software tools to enhance internal reviews. The State will
use funds to establish new rate review procedures.
· Improve transparency and consumer interfaces:
Pennsylvania proposes to build upon the comparison guide on its website
by developing a web-based interactive tool and data repository to allow
consumers to view and compare product offerings and rates to make the
best decision. The website will also include additional transparency
enhancements including consumer comments, summaries of approved rate
filings, and the final rate determinations.
· Hire new staff: Pennsylvania proposes training for current staff.
· Improve IT: Pennsylvania will develop a database for market analysis and consumer assistance tools.
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 a fact sheet on the awards announced today, please visit: