HHS struck a blow for affordable health insurance yesterday when it announced that $27.5 million in extra grant money will be available to states that have the power to modify and deny excessive insurance rate hikes.
Comments were due to HHS Tuesday on provisions in the federal health reform law that require increased scrutiny of unreasonable rate hikes. Consumer Watchdog's letter urged greater public transparency and stronger standards for review. But we also made the point that has been at the center of our advocacy throughout the health reform debate, both in Sacramento and Washington, DC. Consumers will not see relief from skyrocketing rate hikes until every state has so-called "prior approval" rate regulation to make sure insurance companies aren't ripping consumers off.
As we wrote:
Ultimately, state insurance regulators will need full “prior approval” authority to reject or modify, and not just review, excessive or unreasonable rates if health reform is to succeed in expanding access and affordability of health care. This authority, along with a right of public intervention and backup federal review and regulation of rates, are the only certain way to control health insurance rates. However, in the absence of that authority, the proposed regulation … can take the crucial first step by exposing insurance rate hikes to close regulatory and public scrutiny.
The health insurance lobby successfully killed efforts to require them to get permission before hiking rates in the federal health reform law, and our efforts to pass such a rule in California (modeled on the state’s Proposition 103 regulation of auto and other property insurance) has been blocked by the industry year after year. But the dynamics of that fight are changing. The health reform law will only succeed in expanding access to health care if it also reduces the cost of insurance. So far, it doesn't. Insurance regulators with the power to say no to excessive spending by health insurers is the only proven way to hold down premiums. So, it was with great pleasure that we received yesterday’s announcement that HHS will reward those states that have the power to deny excessive rate hikes. Every state insurance regulator who doesn't seek that authority is abandoning consumers to the mercy of the insurance industry.