Company Health Insurance Rate Increases Will Lead to Rate Review as Part of Health Care Reform According to the Affordable Care Act
By: Robert Pusateri (Capstone Brokerage) July 16, 2015
Many small businesses offering company health insurance coverage have faced premium rate increases over the years. Some of my clients really start to stress at the time of renewal because they have been hit with hikes as high as 75% in the past. Rate increases are straining on American families as well as small businesses. Many of the increases lead employers to offer less coverage at a higher cost. As a consumer there is little information provided by the insurance company as to why the sudden rate increase. In the past many employers have become extremely frustrated often wanting to know more. One of the benefits of the Affordable Care Act (ACA) for this situation would be the implementation of state rate review programs.
A rate review program has been put in place by the ACA to help protect individuals and small businesses from rate increases that are not justifiable. A major benefit to the Affordable Care Act (ACA) is that there is an unprecedented level of scrutiny and transparency to any significant increases in health insurance policy premiums. A rate increase of over 10% will be looked at by an independent expert to insure that the increase is in fact justified.
According to www.cms.gov
As of January 1, 2014:
~ Forty-nine States, the District of Columbia and three U.S. territories (Guam, Puerto Rico and the U. S. Virgin Islands) have effective rate review in at least one insurance market;
~ In five States and two U.S. territories, the Federal government will conduct reviews in all markets, until those areas are able to strengthen their review processes and authorities.
This is a huge improvement from when the ACA was first implemented. Prior to ACA implementation, some states voluntarily offered rate review information; however, with the passing of the rule all states are now required to regulate and provide rate review services. The rate review can be either conducted by the state or through the federal rate review program. To find out how your state is regulated check here.
There is an opportunity for consumer participation in the process of rate review as well. Not all states offer public input but it is likely to be more common in the future. Many states are looking at a comment period, public hearing or formal appeals process that allows consumers to comment on increases in premiums that health insurance companies are proposing. These comments may have a real effect in keeping premium costs in check.
Add premium increases to the Affordable Care Act regulations and it leaves several small businesses questioning providing health insurance at all. Many feel like their employees could get better coverage on the individual market.
With a significant part of the expansion of health coverage under the Affordable Care Act relying on the private insurance market, it is critical that health care advocates use every tool to strengthen, defend, and preserve the affordability of private health insurance plans. Rate review is a tool that advocates can use to do just that. For more information about rate review visit CMS.GOV (or contact your insurance broker.
