Many state insurance departments fail to rigorously review insurance companies' rate hikes, partly due to lack of staff, according to a study by the Kaiser Family Foundation.
Based on interviews of selected state insurance departments across the country, the foundation found:
1. Some carriers aren't subject to reviews. Some states apply rate reviews only to certain carriers, such as HMOs or Blue Cross Blue Shield plans, and exempt many commercial carriers.
2. Review standards are subjective. Many states use a subjective standard to review and approve rates.
3. Process lacks transparency. Many states make little or no effort to make rate filings transparent and a few states even have laws making all information in a rate filing proprietary.
4. Inadequate resources. Many states lack the capacity and resources to conduct an adequate review. Some states do not have a sufficient number of trained actuaries and then are required deem a rate approved if it is not acted on within 30 or 60 days.
The study found that states with prior-approval authority over rates appear to be better positioned to negotiate reductions in rate requests.
Read the Kaiser Family Foundation study on health insurance (pdf).
Read more coverage of health insurance rate hikes:
- New Health Insurance Rate Hikes Partly Due to Healthcare Reform
- HHS Sec. Sebelius Calls on Anthem Blue Cross of California to Justify Rate Hikes
- Inflation in Health Benefits Highest Since 2004; Deductibles Reach $1,200
Based on interviews of selected state insurance departments across the country, the foundation found:
1. Some carriers aren't subject to reviews. Some states apply rate reviews only to certain carriers, such as HMOs or Blue Cross Blue Shield plans, and exempt many commercial carriers.
2. Review standards are subjective. Many states use a subjective standard to review and approve rates.
3. Process lacks transparency. Many states make little or no effort to make rate filings transparent and a few states even have laws making all information in a rate filing proprietary.
4. Inadequate resources. Many states lack the capacity and resources to conduct an adequate review. Some states do not have a sufficient number of trained actuaries and then are required deem a rate approved if it is not acted on within 30 or 60 days.
The study found that states with prior-approval authority over rates appear to be better positioned to negotiate reductions in rate requests.
Read the Kaiser Family Foundation study on health insurance (pdf).
Read more coverage of health insurance rate hikes:
- New Health Insurance Rate Hikes Partly Due to Healthcare Reform
- HHS Sec. Sebelius Calls on Anthem Blue Cross of California to Justify Rate Hikes
- Inflation in Health Benefits Highest Since 2004; Deductibles Reach $1,200