Premium Review Forum

By Bobby Caina Calvan

Insurance Commissioner Dave Jones has won approval for an emergency regulation that gives him authority to enforce a new federal rule requiring health insurers to spend at least 80 percent of premiums on medical care.

Until now, state regulators were limited to enforcing a 70 percent “medical-loss ratio.” But as of Jan. 1, California’s standard has been superceded by the federal health care law that requires insurers to comply with the higher level.

Under the new law, insurers who fail to comply with the minimum medical-loss ratio this year must issue refunds next year to customers who buy insurance on their own.

While HHS can review proposed insurance premium increases, it lacks the authority to actually stop them

By Rebecca Vesely

The obvious question is: Where’s the teeth? On Dec. 21, HHS issued proposed regulations that will require health insurers to disclose and justify premium rate increases of 10% or more starting in July. But the federal government—along with most states—lacks the authority to reject insurance premium increases. Instead, federal and state officials say they hope increased transparency and publicity about soaring premiums will help dissuade insurers from jacking up rates.

“Ultimately, we believe the bright light of sunshine will convince more insurers to think twice and check their math before submitting large rate hikes, which means the benefits of these new rules will be felt by millions of Americans,” HHS Secretary Kathleen Sebelius said at a news conference announcing the proposed regulations. On the surface, that may seem like wishful thinking. From insurers’ perspective, big rate increases, especially in the individual and small-group markets, are a reflection of rising medical costs and sicker customers.