HHS report shows rate increases in individual and small group plans are moderate

An HHS annual report claims that in 2015, the Department’s Rate Review Program reduced total health care insurance premiums for renewed single risk pool plans by an estimated $1.1 billion in the individual market and by $418 million in the small group market. HHS estimates that 6.5 million consumers benefited from this $1.5 billion in premium savings in 2015.

The report’s data also indicates that health insurance premium rate increases in the individual and small group market have remained moderate since 2013, with an average rate increase in the individual market of 2.4 percent in 2014 and 6.9 percent in 2015, and an increase of 3.6 percent in 2014 and 4.3 percent in 2015 for the small group market.

The programs. Section 1003 of the Patient Protection and Affordable Care Act (ACA) amended Part C, Title XXVII of the Public Health Services Act to establish the Rate Review and the Rate Review Grants Programs, which became effective in 2011. These programs attempt to bring new levels of scrutiny and transparency to health insurance rates in both the individual and small group markets. According to HHS, this increased review has resulted in some issuers lowering their implemented rates (compared to the proposed rates), while increased transparency allows consumers to view rate information that was previously unavailable.

Increased review. Under the Rate Review Program, since September 1, 2011, all issuers requesting rate increases of 10 percent or more for non-grandfathered products in the individual and small group markets are required to submit a rate filing justification to HHS. States review these proposed rate increases to determine whether they are unreasonable under the federal definition (45 C.F.R. 154.205(a)) and by considering all of the factors listed in 45 C.F.R. 154.301. For states without effective rate review programs, HHS conducts the review.

Increased transparency. States with effective rate review programs must post information for proposed increases of 10 percent or more to their state website or provide HHS’ web address for such information, and must have a mechanism for receiving public comments. After review, the states must post final increases or provide HHS’ web address for such information.

In addition, the issuer must publicly disclose, in a prominent location on its website, any rate increase was deemed unreasonable by the state, and provide a final justification for implementing the unreasonable rate increase.

There are currently five states without effective Rate Review Programs: Alabama, Missouri, Oklahoma, Texas, and Wyoming.

Other conclusions. The current report’s data also indicates that there was an increase in competition and product choice in the individual market from 2014 to 2015. For instance, the number of submitting issuers in the individual market grew from 429 in 2014 to 577 in 2015. In the small group market, the number of submitting issuers increased by nearly 70 percent. The number of product filings also nearly doubled from 2014 to 2015.

Finally, the data shows that the number of consumers who purchased coverage in the individual market increased by 11 percent (from 13.5 million in 2014 to 15.1 million in 2015). In the small group market, there were almost 100,000 more projected enrollees in 2015 than in 2014 (from 10 million in 2014 to 10.1 million in 2015).

SOURCE: HHS Rate Review Annual Report, December 30, 2015.

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