A new health insurance rate increase review program created by the Patient Protection and Affordable Care Act of 2010 (PPACA) has led to rate reductions for 788,938 enrollees, according to the U.S. Department of Health and Human Services (HHS).
The PPACA rate review program rate reductions have affected about 0.4% of the 156 million U.S. residents who have commercial health coverage, according to LifeHealthPro calculations made using HHS data and data from the Census Bureau.
The rate reductions have led to a total of about $148 million in rate changes, or an average of about $188 in reductions per affected enrollee, and the changes have lowered those enrollees’ rate increases by an average of 2.8 percentage points, officials say.
PPACA does not give state or federal regulators the authority to limit rate increases, but it does give HHS the authority to require health insurers to explain what HHS believes to be “unreasonable” rate increases on the Web.
The review rules took effect Sep. 1, 2011.
PPACA has provided $250 million in funding that states could use to build and expand rate review programs from before the program took effect until 2014. The rate review program has awarded $160 million in grants to the District of Columbia and 45 states, and it expects to make more awards this year and in 2013, officials say.
In some states, insurance regulators conduct the reviews. In other states, HHS handles the reviews. HHS requires that notices of increases over 10% undergo reviews.
States have made about 69% of the reasonableness determinations.
State or regulators have found half of the double-digit rate increases announced to be unreasonable, HHS officials say.
Officials have not reported finding any examples of being increase requests being unreasonably low.
“Disclosing proposed increases sheds light on industry pricing practices that many experts believe have led to unnecessarily high premium prices,” officials say in the report. “This transparency in the health insurance market helps to promote competition, encourage insurers to work towards controlling health care costs, and discourage insurers from charging unjustified premiums.”