Last month, HHS issued preliminary regulations mandated under the federal health reform law that would require health insurance companies to disclose and justify any premium increases of 10% or more starting this year, the New York Times reports.

HHS Secretary Kathleen Sebelius said the reviews would "help rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for so many families."

Under the proposed rules, insurers in the individual and small group market that want to increase premiums by 10% or more must publicly disclose the proposed rate hike, along with an explanation. HHS officials said that "[s]uch increases are not presumed unreasonable, but will be analyzed to determine whether they are unreasonable."

Beginning in 2012, the government will establish individual thresholds for each state that reflect its cost trends, and insurers will be expected to disclose and justify rate increases above those limits.

Assistance for Rate Reviews

In addition, the federal government will monitor each state's efforts to review insurers' premium rates (Pear, New York Times, 12/21/10).

As part of the overhaul, the government distributed a total of $46 million to 45 states and the District of Columbia to help improve and expand their ability to enforce new health insurance industry regulations in the reform law. The $1 million grants were the first phase of a five-year, $250 million initiative to help states implement the new regulations, as well as consumer safeguards that would enable states to require pre-approval of proposed premium rates hikes (California Healthline, 8/17/10).

If a state has established an "effective rate review system," the state would conduct the annual reviews of premium increases, according to HHS.

If the government determines that "a state lacks the resources or authority to do thorough actuarial reviews, [HHS] would conduct them," according to the proposed rules.

HHS will publish information about all rate reviews on the department's website, and insurers will be required to post the information prominently on their websites (New York Times, 12/21/10).

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