Posts Tagged ‘premiums’

The ACA: Saving Consumers’ Premium Dollars Once Again

Friday, September 14th, 2012

Hot off the heels of $1.1 billion in rebates from insurance companies that failed to meet the medical loss ratio (MLR) standard, the ACA is again saving money for consumers. The Department of Health and Human Services (HHS) just released a new report that finds that rate review, or increasing transparency over insurance premium rate increases, has saved consumers about $1 billion in the past year. These savings, calculated by determining what insurance companies would have set as premiums versus what they actually were allowed to do, is another way the ACA is making insurance companies play by fairer rules.

Rate review practices vary across states, but the ACA provided new tools, including grants to enhance state regulators’ capacity, that have strengthened many states’ ability to review and approve insurance premiums before they go into effect. In addition, the ACA created a federal standard whereby any insurance company with a rate increase of more than 10 percent is automatically subject to review. Under this new scrutiny, HHS found that 50 percent of rate increase requests were lowered or denied – meaning 800,000 consumers saw lower premiums.

States have won concrete savings for consumers because of rate review: New York saved an estimated $20 million for small businesses, and Michigan saved more than $15 million for individuals and small businesses. Overall, HHS estimates that the difference between insurers requested and allowed rates amounted to 1.4 percent lower premiums in the individual market, and 0.8 percent lower premiums in the small group market. These reductions amount to about $1 billion in insurance savings for consumers.

The even better news is that there is opportunity for more savings. While states have improved their rate review processes since the passage of the ACA, many still lack strong authority to negotiate or disapprove premium increases. And there is a lot more work to be done to increase transparency in rate increases and make the process clearer and more accessible to consumers.

Community Catalyst will soon have some materials on how to work with your state on rate review – so stay tuned!

– Christine Barber, Senior Policy Analyst

 

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Posted in affordability, Affordable Care Act implementation, private insurance | No Comments »

Keep talking up the medical loss ratio!

Thursday, April 12th, 2012

Thanks to the Affordable Care Act, consumers have greater protections when buying health insurance. The new medical loss ratio (MLR) rule requires that health insurance companies must spend at least 80 percent of premiums on medical care and quality improvement activities. Health insurers that fail to meet these minimum standards will be required to pay policyholders a rebate reflecting the difference.

If these rules had been in effect in 2010, 15.3 million health care consumers (5.3 million people in the individual market and 10 million in the small and large group markets) would have received $2 billion in rebates nationally, as found in a recent study by the Commonwealth Fund. Florida and Texas have the highest total estimated rebates of $109 million and $172 million, respectively. The estimated rebates per member range from $145 to $285.

Last year, health insurance commissioners in 17 states applied to reduce the amount that insurers must spend on medical claims. Fortunately, due to strong advocacy, consumers successfully have retained the new MLR standards in many states. Since the rule took effect in 2011, we want to see smaller rebates in subsequent years, which would mean insurers are doing the right thing, providing quality medical care to consumers rather than accumulating profits for themselves.

– Quynh Chi Nguyen, Program and Policy Associate

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Posted in Affordable Care Act implementation, private insurance | 1 Comment »

Sunlight is the Best Disinfectant: Bringing Transparency to Premium Increases

Thursday, September 1st, 2011

Going forward, health insurers will need to be more transparent and accountable than ever before when they seek large premium rate increases. This is because, as of today, the Affordable Care Act (ACA) requires that insurers asking for premium increases of 10 percent or more for plans in the individual and small group markets (excluding grandfathered plans) must publicly disclose and justify their requests.

These requests will then be reviewed by either state insurance departments or the United States Department of Health and Human Services (if no effective state rate review program is in place) to determine whether they are unreasonable. If regulators find this to be the case, the request will be publicly labeled as unreasonable and, in some states, denied. To help make this new regulatory authority as useful as possible to consumers, HealthCare.gov will post disclosure information in an accessible and consumer-friendly format beginning in mid-September. You can see a preview of how this disclosure information will look here.

To coincide with the start of the ACA’s rate review process, an amendment to the final rule related to this provision was also published that incorporates an important change from the original final rule that was published back in May of this year. Thanks to efforts by advocates across the country, the amendment to the final rule makes clear that coverage sold through association plans (these can be a way for a self-employed person to access insurance and are often sold to individuals or small groups) is subject to the ACA’s rate review process as of November 1, 2011. While there is some question about whether or not a limited number of association plans may still be able to avoid being subject to this provision, this is still a tremendous victory for consumers. These advocacy efforts have ensured that a significant loophole in the original final rule was largely closed. Congratulations to all!

—Patrick M. Tigue, Senior Policy Analyst

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Posted in Affordable Care Act implementation, private insurance | 1 Comment »

Is this the best we can do for low-income families?

Friday, October 30th, 2009

While most eyes have shifted to the House, with the release yesterday of their bill, persistent rumors swirl around the Senate that the combination of the HELP and Senate Finance bill will actually offer less financial protection for the lowest income workers than either of the original bills.

Here’s the story: After months of laborious negotiations and weeks of debate, the Senate Finance Committee passed its version of health reform on Oct. 13.  The Finance proposal differed from the bills passed by all of the other committees in numerous ways; one of the most striking was how much less financial protection it offered to low- and moderate-income people who would be required to purchase health insurance.  Premiums under the Finance proposal were higher and benefits lower than in either the Senate HELP or the House proposal.

As Senate leaders work to merge the HELP and Finance proposal into a single bill, they are trying to reduce some of the premiums and, according to a paper by the Center on Budget and Policy Priorities and discussions Community Catalyst has had with a number of Hill staff, the focus is on reductions for people between 200-400 percent FPL—an admirable undertaking that we fully support.

However, in order to pay for those increased premium subsidies, Senate leaders are considering reducing premium subsidies for the lowest income households by as much as 50 percent more than the already low level in the Finance proposal.  If this proposal is adopted, many low-income households will have a difficult time meeting their premium obligations, or could also be faced with financial penalties for failing to purchase health insurance.  Rather than being helped by reform, they will be hurt.

Is taking subsidies away from low-wage workers really the only way the Senate can think of to finance necessary improvements in subsidies for those with slightly higher incomes?  David Stockman, Ronald Reagan’s first budget director, famously noted that once in Washington he found it was “easier to curtail weak claimants than weak claims.”  That adage appears to be alive and well in Washington today, as Senate leaders seem more willing to impose an unmanageable burden on low-wage workers than to explore progressive taxation or to wring a little more waste out of the health care industry, as their colleagues did in the House.

The Senate bill is still an enormous improvement from where we currently are and the process needs to continue to move forward.

As for subsidies, it is not too late for the Senate to change course, and for a bill to emerge that will improve affordability for both low- and moderate-income households.  But it will only happen if people raise their voices and demand it.

–Michael Miller, Director of Strategic Policy

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