May 15th marks the official start of rate review season for state and federal insurance regulators. It used to be that each state had its own timeline and process for reviewing health insurers’ proposed premium rates, but those days appear to be over. The federal government, through the Center for Consumer Information and Insurance Oversight (CCIIO) is mandating a more uniform process, including a requirement that proposed rates for 2016 in the individual and small group markets be submitted to CCIIO and the state departments of insurance (DOI) by May 15, 2015.* Furthermore, CCIIO is requiring most states (all but Alabama, Missouri, Oklahoma, Texas and Wyoming, whose rates are federally reviewed) to post on their websites those rates subject to review within 10 business days.
What’s at stake?
Health insurance premiums have risen steadily over the last decade, with dramatic annual increases in the years leading up to enactment of the Affordable Care Act (ACA). However, prices have been remarkably stable over the last few years, and premium increases for those in the individual market were on average lower than expected after the first full year of ACA implementation.
It remains to be seen whether the relatively low rate of premium growth will continue, or whether we’ll start to see prices inching up again. Insurers set their proposed premium rates based on a number of different factors, and those factors are likely to vary from market to market and plan to plan. What we do know is that rate review matters, providing an important, independent cross-check on insurers’ assumptions and justifications for rate increases.
Because of new federal rules, consumers in all states will be able to see proposed rate increases for 2016 that are undergoing review within just a few weeks. Some are already available, such as proposed rates in Maryland and Oregon. If those two states are any kind of guide, there could be a fair degree of variability among insurers’ projected rates. For example, Carefirst Blue Cross Blue Shield in Maryland is asking for a 26.7 percent increase, while Cigna wants a 2.9 percent reduction. Similarly, Moda Health in Oregon is proposing to hike premiums by an average of 25 percent for its plans, while Kaiser Permanente came in with a 1.9 percent reduction. Both of these states have robust rate review processes, and insurers’ requests will be subject to scrutiny; excessive, unjustified increases could be adjusted downwards.
Not all states conduct as proactive and thorough reviews as do Maryland and Oregon, but in order to maintain their status as federally recognized “effective rate review” programs, state DOIs must post rate filings on a publicly accessible website (or link to the CCIIO website) and provide a mechanism for receiving public comments on proposed rates. This process allows consumer advocates, journalists, researchers and the public to gain a window on what has historically been a black box process.
*CCIIO is allowing states running a state-based marketplace to receive a one-time extension of the May 15th deadline, to June 5, 2015, if certain conditions are met.