HHS Offers States $200M to Fight 'Unreasonable' Premium Hikes

John Commins, for HealthLeaders Media , February 25, 2011

Health plan leaders polled for HealthLeaders Media's Industry Survey 2011, cited "government laws and mandates" as a top driver of healthcare costs, second only to overutilization of services.

In a letter this week to HHS, Daniel T. Durham, AHIP's executive vice president for policy and regulatory affairs, warned that "politicizing the reviews…threatens to undermine the financial health and continued viability of health plans." Durham reiterated the health plans' contention that "strong steps outside of the rate review process (emphasis theirs)are needed to address the underlying factors that are driving medical costs. The rate review process cannot serve as a substitute for meaningful health care cost containment."

However, the nonprofit Consumer Union said the grant money is welcomed and needed.

"Right now, we have a patchwork of rate review rules and practices in the states. Even states that have authority to reject rate increases often lack the resources to collect sufficient data and closely analyze rate hikes," said Sondra Roberto, a staff attorney for Consumers Union. "An insurer's rate increase is always based on future projections of revenues and costs, so it is very important that these projections are analyzed to ensure that they are reasonable, fair, and based on valid data and assumptions. We hope that states receiving this funding will use it to improve data collection, standardize filing requirements, and conduct more in-depth reviews."

Roberto said states have a poor history of considering the impact of rate hikes on consumers, or of making the process open for consumer advocates. "These grants will hopefully encourage more states to open up the process to allow more public involvement and use this input to balance the hardship on consumers against the company's need for an increase," she said. 

John Commins is a senior editor with HealthLeaders Media.

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