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HHS: PPACA rate review system is working

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The U.S. Department of Health and Human Services (HHS) says in a new report that the Patient Protection and Affordable Care Act (PPACA) rate review program has done a good job of increasing health insurance rate transparency and holding down premiums.

HHS officials say issuers filed 1,933 product rate filings for returning individual market products for 2015 and asked for double-digit rate increases in 443 of those filings. The rate review process helped cut the number of double-digit increases actually implemented to 337, officials say.

See also: PPACA rate review program expands

The rate review process helped cut the average implemented rate increase to 6.9 percent, from 8.7 percent, officials say. 

In the small-group market, officials say, issuers proposed double-digit rate increases for 251 of the 2,377 returning products and actually implemented 220 of the double-digit increases.

The rate review process helped cut the average small-group increase to 4.3 percent, from 5.1 percent, officials say.

The PPACA rate review program requires issuers of non-grandfathered individual and small-group coverage to send justifications for proposed rate increases of 10 percent or more to HHS. Regulators at HHS or in state agencies are supposed to review the proposals for reasonableness.

Some states, such as New York state, give state insurance regulators the authority to reject or change unreasonable rate proposals, but PPACA itself does not give regulators that kind of authority. Regulators who lack official rate-change authority may work behind the scenes to press issuers for lower rates, or, in some cases, they may try to use publicity as a tool for persuading issuers to reduce increases.

See also: California measure would let consumers sue over health rates

Critics have complained that the PPACA rate review process does not appear to take the need to maintain the solvency of the issuer into account, and that arbitrary regulator moves to cut proposed increases may have contributed to the failure of issuers such as Health Republic Insurance of New York.

Critics have also argued that, because of a rushed rate-setting process, insurers had little concrete information about how individual policies had performed in 2014, the year in which major PPACA underwriting restrictions and benefits mandates took effect, when they set their 2015 and 2016 rates.

See also: Will King vs. Burwell kill the 2016 individual health market? and PPACA risk corridors gap rocks more carriers

Assurant Inc. (NYSE:AIZ), a company that made a big push into the PPACA public exchange system in 2015, leaped out in 2016, saying premiums were too low to cover claims.

UnitedHealth Group Inc. (NYSE:UNH), a company that dramatically expanded its public exchange program in 2015 and was on track to expand participation further in 2016, abruptly announced this Fall that it was retreating from most efforts to actively market 2016 exchange plan coverage, in part because of concerns about rate adequacy.

In the new HHS rate review report, the only point at which officials address any matter related to issuer solvency or market sustainability comes in the conclusion:

“The data indicates an increase in competition in the individual market and more product choice for consumers from 2014 to 2015,” officials say, adding that the number of coverage issuers in the rate review system increased to 577 in 2015, from 429, in the individual market, and by 70 percent in the small-group market.

Officials appear to be implying that the growth in the number of individual and small-group issuers between 2014 and 2015 shows that rates were high enough to keep issuers interested in selling coverage.

HHS has not given the names of the report authors in the visible portion of the PDF. In the meta text, Lisa Cuozzo appears as the name of the file creator, and Phong Van appears as the name of the author.

See also:

Florida regulators tell Humana to raise PPACA individual plan rates

5 Oregon insurers under orders to raise their rates

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