Insurers in Texas are going to have to start justifying their unreasonable rate increases.

Up until now, the Texas Department of Insurance allowed uncontested insurance rate increases of up to 50 percent unless a consumer complained. But under the federal Patient Protection and Affordable Care Act (PPACA), state regulators will require insurance companies to justify “unreasonable” premium rate increases.

Officials say no new legislation is needed for them to gain authority in this matter – they’ve had it all along, but have exercised it sparingly. Lack of resources and data have prevented the department from fully investigating all rate increases, according to Katrina Daniel, senior associate commissioner of the department’s life, health, and licensing program.

But under the PPACA, insurance companies will be required to justify “unreasonable” rate increases before imposing them. Companies also will have to post the information on their websites.

One of the key problems, according to Daniel, is that the federal government has yet to define what an “unreasonable” rate hike is.

Department of Health and Human Services official Jay Angoff, who heads the department’s insurance oversight office, said the agency was working on the regulation that would define a “reasonable” increase in health insurance premiums. Angoff said HHS was focused on medical trends, or the rate at which medical expenses generally increase. Still, there is no estimate for how long the determination will take.

Meanwhile, federal officials distributed the first $46 million in grants to states. The money, which is set for $250 million total to be distributed over the next five years, was given to help states be better watchdogs. The $1 million that Texas received was expected to go toward collecting the data required for the greater number of rate reviews, develop a public disclosure process to include information from insurers justifying their premium increases, and upgrade technology for data analysis.

Insurance companies have argued all along that rising health care costs have forced their rates to increase, and that the health care law doesn’t adequately tackle that issue. As a result, many health insurers are concerned about how the PPACA will affect their bottom line.

For example, insurers will no longer be able to exclude people because of pre-existing medical conditions. Also, beginning next year, most insurers will have to spend at least 80 percent of their premium dollars on medical care, reducing what some now set aside for administration and profits.

It’s a difficult and confusing time for insurers, but also a time for change. Insurers who are able to keep up with the changes and create an effective cost model will be better off in the long run.