“The Affordable Care Act puts in place critical market reforms to improve quality and reduce the cost of health care for employers and individuals. Increased competition, lower insurance overhead, and better risk pooling in health insurance Exchanges in 2014 are expected to reduce premiums in the individual market by anywhere from 14-20 percent according to the Congressional Budget Office,” said HHS Secretary Kathleen Sebelius. “Between now and then, we will continue to work with States to ensure consumers are receiving value for their premium dollars and to avoid the kind of double digit premium increases seen recently. The State proposals approved today demonstrate the need and desire for new resources and tools to help them protect against unjustifiable premium increases.”
The Affordable Care Act provides States with $250 million in Health Insurance Premium Review Grants over five years to help create a more level playing field by improving how States review proposed health insurance premium increases and holding insurance companies accountable for unjustified premium increases. Applications for the first round of Health Insurance Premium Review Grants were made available on June 7.
The grants build on the Obama Administration’s work with States to implement the Affordable Care Act. Earlier this year, Secretary Sebelius called on certain insurance companies to justify large premium increases and encouraged State and local officials to obtain stronger health insurance premium review authorities under State laws. This increased scrutiny by the Administration and by several States has led to the withdrawal or reduction of several proposed health insurance premium increases that in some cases turned out to be based on faulty assumptions and data.
This grant will be used for the purposes detailed in the approved application.
The following is a general summary of how Maine intends to use its funding:
Expand the Scope of the Review Process: Currently, Maine has prior approval review authority for all individual and small group market products. Carriers may elect to meet a three-year average medical loss ratio guarantee (meaning they will spend a certain percentage of premium dollars on medical care rather than overhead or profits) and avoid prior approval in the small group. Maine will expand its current practice of health insurance premium review by collecting and analyzing small group market data from carriers electing the loss ratio to inform the Department if additional statutory authority is needed.
Improve the Review Process: At present, Maine’s informational filings lack sufficient detail to determine full compliance with the law. The State plans to collect additional information on small group rates. Additionally, Maine will collect historical and projected cost and utilization trend data to establish benchmarks.
Increase Transparency and Accessibility: Maine posts extensive rate filing information on its website, and encourages consumer participation in the rate filing process by hosting field hearings in addition to formal hearings. Maine will encourage increased participation of consumer advocacy groups in rate hearings and will compile submitted rate filing information into a consumer-friendly format for posting on its website.
Develop and Upgrade Technology: Maine will upgrade its systems to improve efficiency and aid in the health insurance premium review process. The State will also establish a data center to compile and publish fee schedule information.
“States will use these grant dollars in the way that makes the most sense for their insurance consumers,” said Jay Angoff, Director of the Office of Consumer Information and Insurance Oversight. “As we continue to implement the new health insurance reform law, we will continue to work with States to ensure they have the tools they need to ensure the stability of the marketplace, keep costs low and provide consumers with increased transparency, choice and quality they need to make the best health care decisions for their businesses and families.”
The Health Insurance Premium Review Grants are one element of a broad effort under the Affordable Care Act to reduce the unreasonable premium increases proposed by some insurers today. Additional resources from this $250 million program will be available in subsequent years to further strengthen State health insurance premium review procedures. Other statutory provisions designed to improve affordability include:
§ In 2011, the Affordable Care Act allows the Secretary of the U.S. Department of Health and Human Services to review justifications for unreasonable increases in premiums and make them public;
§ In 2011, insurers will generally be required to spend at least 80 percent of premium dollars on medical care services and quality-improvement activities and limit their spending on overhead, marketing, CEO salaries, and profits; and
§ In 2014, the Affordable Care Act empowers States to exclude health plans that show a pattern of excessive or unjustified premium increases from the new health insurance Exchanges.