Health Insurance Rate Regulation Varies Widely Among States

A recent Kaiser Family Foundation study found states vary dramatically in how they review and approve or disapprove proposed health insurance rate increases. The authors surveyed 50 state rate review statutes and interviewed insurance regulators in ten states (Alaska, Connecticut, Colorado, Idaho, Louisiana, Maine, Ohio, Pennsylvania, South Carolina, and Wisconsin). The study, which only covers individual and small group plans, found:

• Most states lack the capacity and resources to conduct an adequate review;
• Having rate approval authority does not necessarily protect consumers from large rate increases;
• Some states’ authority to disapprove rates is limited to certain carriers, or provides alternative regulatory pathways allowing insurance companies to avoid reviews altogether;
• Most states interviewed use subjective standards to guide the review and approval process, giving them more flexibility but making the process appear arbitrary; and
• Most states where regulators were interviewed have made little or no effort to make rate filings transparent. Only Colorado, Maine, and Wisconsin allowed a policyholder to request a public hearing on a rate filing.

The study comes on the heels of increased funding to enhance state rate review processes provided under the new federal health care reform law. Connecticut applied for and received a $1 million federal grant in October 2010.