‘Unjustified’ Premium Increases Obstruct ACA’s Transparency
By - Covered California – which encompasses almost 13 percent of all Marketplace enrollees paying for nationwide coverage – announced yesterday a “modest” anticipated 4 percent statewide weighted average increase for 2016 healthcare plans within the Health Insurance Marketplace, according to the Centers for Medicare & Medicaid Services (CMS). Last year’s increase was reportedly slightly higher at 4.2 percent. This is the second consecutive year a rate increase fell into single-digit territory, says CMS. Final rates will be published by November of this year.
“We are encouraged by Covered California’s proposed rates for the 2016 plan year and pleased that consumers in California will continue to have access to quality, affordable health coverage,” states Kevin Counihan, CEO of the Health Insurance Marketplaces. “Today’s announcement demonstrates that the Affordable Care Act is working as intended to spur competition and transparency in the Marketplaces, keeping premium increases low and leading to affordable new choices for consumers. We are committed to working closely with other states as they review rate proposals and finalize rates for the 2016 plan year,” he adds.
According to a recent letter from Counihan, addressed to the Department of Health & Human Services/CMS, two specific influences were directly considered by state insurance commissioners when they were determining finalized rates. Says CMS’s press release, “Covered California credited an enrollment mix that includes many young and healthy enrollees, as well as premium stabilization programs created by the Affordable Care Act, for helping to hold the line on rate increases.”
The Affordable Care Act connection
As health insurance premiums continue to rise, having done so for over the past 10 years or so, insurance companies often raise their rates without explanation or justification, says CMS.
According to CMS, the rate review program on behalf of the Affordable Care Act (ACA) helps maintain affordable healthcare premiums by mandating insurance companies document – both individual and small group markets – and submit for review any increases that meet or exceed 10 percent. Additionally, the rate review program makes “unreasonable” rate increases openly justifiable in an effort to advance levels of transparency.
“The Affordable Care Act brings an unprecedented level of scrutiny and transparency to health insurance rate increases. The Act ensures that, in any State, large proposed increases will be evaluated by experts to make sure they are based on reasonable cost assumptions and solid evidence,” CMS explains. “This analysis is expected to help moderate premium hikes and provide those who buy insurance with greater value for their premium dollar. Additionally, insurance companies must provide easy to understand information to their customers about their reasons for significant rate increases, as well as publicly justify and post on their website any unreasonable rate increases.”
The ACA, which mandates results be publically available via a simplified format, provides states with $250 million over 5 years in Health Insurance Rate Review Grants to provide states with needed resources so health insurance companies can be held responsible for “unjustified” premium spikes or expected rate increases, says CMS.
States receiving the most grants – 4 grants – include California, Oregon, Utah, Arkansas, Kentucky, Michigan, Maryland, Massachusetts, Hawaii, and New Hampshire. States that did not receive grants include Alaska, Oklahoma, Georgia, Florida, Wyoming, Idaho, and Iowa.
As the healthcare industry’s mission to increase the transparency of data advances, it is hopeful such information will promote actionable change based on the absorption of imperative financial information.
