By Tom Murphy, AP Business Writer
Health insurers will have to justify some rate hikes starting next year under a proposed federal rule that raises scrutiny for individual and small group policies that have slapped many consumers with soaring premiums.
The Department of Health and Human Services said Tuesday it will require rate increases of 10% or more to be publicly disclosed and reviewed to determine whether the hikes are reasonable.
The federal government will not have the authority to reject rate increases, but it will review them in states that lack the resources or authority for "thorough actuarial reviews," HHS said in a statement. If an increase is deemed unreasonable, the finding will be posted on websites for HHS and the insurer.
The new rule, which is part of the broader health care overhaul, "maximizes consumer protection and transparency without unduly burdening the industry," said Jay Angoff, head of the HHS office of insurance oversight, during a teleconference with reporters.
HHS Secretary Kathleen Sebelius said consumers in individual and small group markets don't have sophisticated purchasing teams like large employers, and they don't fully understand their options."Putting some tools back in their hands, I think, can be enormously helpful," she said.
Steep hikes in those markets have been a hot topic since early this year, when reports of Anthem Blue Cross raising rates as much as 39% in California helped reignite stalled overhaul legislation. The insurer later withdrew the increase, and state regulators wound up approving an average rate increase of 14% for Anthem Blue Cross, a WellPoint Inc. subsidiary.
That initial hike, which averaged 25%, drew criticism from an Obama administration that questioned how such increases could be justified while WellPoint reported multibillion-dollar profits. WellPoint and other insurers have pointed to the rising cost of medical care and high unemployment — not corporate greed — as the main factors behind their price hikes.