The Obama administration said Tuesday that Americans have saved $1 billion on health insurance, one year into a new mandate on insurers to explain why they want to hike rates.
As part of a slew of new insurance regulations in the 2010 Affordable Care Act, insurers who want to raise premiums by 10 percent or more must publicly announce their intention and allow a government panel to review whether it’s reasonable — even though the panel cannot actually block the increase.
Administration officials said that of the companies who proposed hikes, 64 percent were found to be unreasonable but didn’t change their course. Another 26 percent agreed to a lower hike and 12 percent abandoned the idea altogether.
“The health care law is holding insurance companies accountable and saving billions of dollars for families across the country,” said Secretary of Health and Human Services Kathleen Sebelius. “Thanks to the law, our health care system is more transparent and more competitive, and that’s saving Americans real money.”
The estimated $1 billion in savings are a relatively small percentage of total spending on private insurance, which stood around $822 billion in 2010.
And officials also admitted that some of the savings are likely due to state laws requiring insurance rate reviews, which were already in place before the federal health care law. Still, they said the health care law makes it easy to track the data for the first time.
“Now we have a much better idea of what’s being asked for and beyond that, why it’s being asked for,” said Gary Cohen, director of the Center for Consumer Information and Insurance Oversight under the Department of Health and Human Affairs.