Large Premium Hikes for Health Plans May Require Justifications
December 2010
In another move designed to reign-in large rate hikes for
health plans, the White House has announced a mandate for 2011 that would require health insurance companies to justify rate increases of more than 10% a year.
This comes in light of premium hikes of up to 30% in some states, even as major
health insurance companies post record profits for 2010. This steep rise in insurance premiums have led state and federal legislators to step in and carefully evaluate insurance costs.
Those health insurance companies whose rate increases don't reflect medical inflation would be called upon to defend their rates and post written assessments of their costs on the federal government's new website, healthcare.gov.
Supporters of the mandate have hailed it as a great "first step" towards controlling costs for health plans and helping consumers feel "in charge of their own healthcare."
Facts on:
Health Insurance Companies
Did you know...
Rate hikes of more than 10% for health plans may get greater scrutiny in 2011.
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The head of America's Health Insurance Plans criticized the 10% threshold and called it an "unrealistic" number that fails to take into account "all of the components that determine premiums." This includes the federally imposed minimum of coverage that passed with the
healthcare bill.
The mandate does NOT give the federal government the right to block premium hikes for health plans. Instead officials hope that by drawing attention to the hikes, and forcing insurance companies to defend them, many companies will think twice about implementing hikes that aren't necessary or justified.
States legislators would still be in charge of approving or denying the rates, but only in those state that already have the legislative power to do so. States that cannot afford greater oversight of insurance companies could also ask for federal assistance in order to meet the mandate.
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