Things keep getting tougher
for US health insurers in the wake of the enactment of the Patient
Protection and Affordable Care Act in March 2010. In what the
Department of Health and Human Services (HHS) terms a phasing in of
regulations under the act, it has released a proposal that will
compel the 417 health insurers selling individual or small group
policies to make public and justify any rate increases of 10% or
higher in 2011.
Implementation of the
regulation will be in the hands of state insurance regulators of
which, according to the HHS, 43 currently have some rate review
process in either the individual or small group markets, or both.
To improve the ability of state regulators to review rates federal
grants totalling $250m over five years are to be made
available.
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The HHS’ move follows many
instances of massive premium increases in the individual and small
group market. Indicatively, based on data from May 2010, the
Council of Insurance Agents and Brokers reported that 71% of group
health schemes with 50 or fewer members had experienced premium
increases of 11% or higher with 19% experiencing increases of 20%
or higher. According to the HHS, there are 24.2m enrollees in small
group coverage.
In the individual health
insurance market, health advocacy organisation the Kaiser Family
Foundation reported that premiums had increased, on average, by 20%
in 2010. According to the HHS, there are 10.6m enrollees in
individual market coverage.
In a statement, the HHS said
its review of the limited data available suggested that the
majority of increases in the individual market exceeded 10%
annually for the past three years.
“These yearly increases
significantly exceed some national measures of medical cost
inflation, such as the medical component of the Consumer Price
Index, whose inflation has typically ranged from 3.7% to 4.4%,”
said the statement.
Countering the HHS’s
argument, Karen Ignagni, president and CEO of the health insurance
industry body America’s Health Insurance Plans said: “California
data shows that prices for a hospital stay increased by more than
150% between 2000 and 2009 – an average annual growth rate of 11%.
Trends likes these are being seen across the country.”
Another regulation weighing on health insurers already
invoked by the HHS provides that from 2011 they must spend between
80 and 85% of their premium income on medical care and quality
improvement.
