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Federal Government to Force Health Insurers to Justify Rate Increases

The White House said December 21 that it will force health insurers selling individual or small group policies to make public and justify any rate...
January 5, 2011

The White House said December 21 that it will force health insurers selling individual or small group policies to make public and justify any rate increases of 10 percent or higher in 2011. State or federal regulators will examine the increases to ascertain whether they are unreasonable, the Obama administration said. Health and Human Services Secretary Kathleen Sebelius said the rate review will "help rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for so many families." Beginning in 2012, the federal government will establish an individual threshold for each state, reflecting the cost trends in the particular state.

Under the proposed regulation, the federal government will evaluate each state's procedures for analyzing insurance rates. Under the new law, insurers that show "a pattern or practice of excessive or unjustified premium increases" can be excluded from the centralized insurance market, or exchange, that is to be set up in each state by 2014. A spokesperson for HHS issued a statement saying despite the reviews by HHS, "The statute does not give us authority to disapprove rates. We do not have that authority. The regulation leaves state laws intact. It does not interfere with state law."

Click here to read U.S. Proposes Rules for Health Insurers to Justify Rates (New York Times 12/21/10)

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