- The Washington Times - Tuesday, August 2, 2011

Beginning next month, health insurance companies must submit for state review any significant increases in the premiums they charge - offering a window into whether new regulations under President Obama’s health care law will raise or lower health care costs.

The new rule goes into effect Sept. 1 and will initially apply to premium hikes of 10 percent or more for plans in the individual and small-group markets. After one year, states may choose higher or lower thresholds, depending on their health cost trends.

It’s one of two major prongs in the Affordable Care Act that aim to lower premium costs for consumers by regulating insurance companies. Insurers must publicly disclose their proposed rate increase, which will be reviewed by a state board. If the increase is deemed unreasonable, the insurer must justify the increase on the company’s own website and on the ACA website.

While most states already review premium increases to some extent, the goal is to make sure every state has a way to determine whether insurers correctly calculated medical treatments and made reasonable assumptions, said Steve Larsen, a top official with the Centers for Medicare and Medicaid Services.

“We’re not saying every rate is going to be reviewed as a result,” Mr. Larsen said. “What we’re saying is, it’s very important that all rates be subject to a review process to make sure they are justified.”

States are being awarded $250 million in federal grants to set up or improve their rate-review process. So far, 41 states have taken steps in that direction, according to a report released this week by the Government Accountability Office.

But the federal funding is not accompanied by enforcement authority. Even if states deem a premium increase to be unreasonable, they will still lack the authority to reject the proposal despite efforts by Sen. Dianne Feinstein to include such a provision in the ACA.

The California Democrat is continuing to push for legislation that would grant the secretary of health and human services the authority to block or modify rate increases judged excessive, unjustified or unfairly discriminatory.

“We almost got it included in the bill,” Mrs. Feinstein said, speaking Tuesday morning at a hearing of the Senate Health, Education, Labor and Pensions Committee. “But we did not, and so since then what’s happening is these big, for-profit companies are raising rates wherever they can, sometimes once a year, sometimes twice a year and sometimes three times a year.”

But Republicans cited a CMS report released last week showing that health care spending will increase slightly more under the ACA than if it had never been passed. Ranking member Sen. Michael B. Enzi, Wyoming Republican, said the rate reviews just “shift blame” for a health care bill he says is sure to increase insurance premiums.

“The authors of the new law did not want to acknowledge the reason premiums are going up is because of the law they enacted,” Mr. Enzi said. “They would much rather point their fingers at the insurance companies and lay all the blame for these increased premiums on them.”

Another major component of the health care overhaul - the new state-based exchanges - saw a major change on Tuesday, when HHS officials confirmed that the director charged with overseeing their creation prepared to step down.

Joel Ario, director of health insurance exchanges at HHS, is leaving his job just as states begin to get guidelines for setting up the exchanges.

“It would certainly shake things up for the states who have had a very good working relationship with Joel, especially when we are all feeling the pressure to move forward … so we can have our state-based exchanges up and running in 2014,” Kansas Insurance Commissioner Sandy Praeger said in a statement.

The idea behind the exchanges is to create easy access to a marketplace of insurance plans and allow uninsured people and small businesses to band together to negotiate for cheaper rates. Nearly 9 million people are expected to use the exchanges in the first year they operate.