Why is This Topic Important to Wealth Managers? This blogticle discusses the effect of legislation on the health insurance market. Since the PPA health insurance oversight has become a federal issue. Thus, we discuss a recent report by the GAO which discusses measures states are taking to become “compliant” with the new laws and regulations.
With premiums increasing for private health insurance, questions have been raised about the extent to which increases are justified.
Traditionally, oversight of the private health insurance industry is primarily the responsibility of states under the 10th Amendment of the Constitution. Nevertheless, in 2010 the Patient Protection and Affordable Care Act provided for the Department of Health and Human Services (HHS) to award grants to assist states in their oversight of premium rates.
A recent study by the Government Accountability Office examined the state insurance premium oversight procedures. The GAO’s report describes (1) states’ practices for overseeing health insurance premium rates in 2010, including the outcomes of premium rate reviews; and (2) changes that states that received HHS rate review grants have begun making to enhance their oversight of premium rates.
The Report (not interestingly enough) found that oversight of health insurance premium rates–primarily reviewing and approving or disapproving rate filings submitted by carriers–varied across most states in 2010.
While nearly all–48 out of 50–of the state officials who responded to GAO’s survey reported that they reviewed rate filings in 2010, the practices reported by state insurance officials varied in terms of the timing of rate filing reviews, the information considered in reviews, and opportunities for consumer involvement in rate reviews.
Specifically, the report found, respondents from 38 states noted all rate filings reviewed were reviewed before the rates took effect, while other respondents reported reviewing at least some rate filings after they went into effect. Survey respondents also varied in the types of information they reported reviewing. While nearly all survey respondents reported reviewing information such as trends in medical costs and services, fewer than half of respondents reported reviewing carrier capital levels compared with state minimums.
Moreover, some survey respondents also reported conducting comprehensive reviews of rate filings, while others reported reviewing little information or conducting cursory reviews. In addition, while 14 survey respondents reported providing consumers with opportunities to be involved in premium rate oversight, such as participation in rate review hearings or public comment periods, most did not.
Finally, the outcomes of states’ reviews of rate filings varied across states in 2010. Specifically, survey respondents from 5 states reported that over 50 percent of the rate filings they reviewed in 2010 were disapproved, withdrawn, or resulted in rates lower than originally proposed, while survey respondents from 19 states reported that these outcomes occurred from their rate reviews less than 10 percent of the time.
Tomorrow’s blog will discuss planning ideas related to advanced markets.
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