Oct 14

Written by: Besselman and Little
10/14/2011 9:36 AM 

Some big health insurance rate hikes will now receive an extra layer of scrutiny.  A new review process has begun as part of the health care overhaul.

Whenever an insurer seeks a rate hike of 10 percent or more for individual and small-employer group coverage, it now must submit the plan for either a state or federal review of whether it's reasonable. Government officials will not have the authority to reject rate increases, but any increases will be posted along with an explanation for them on the website, www.healthcare.gov.

Health insurers have pointed to rising prices for medical care as the root cause behind their premium increases, and they have said this factor is being ignored while public policy discussions focus on premiums.

Steep rate hikes in recent years - some stretching well beyond 10 percent - have strained small businesses and forced some people who buy individual insurance to drop or scale back their coverage.  Health and Human Services Secretary Kathleen Sebelius said in a statement Thursday that the new reviews "will shed a bright light on the industry's behavior and drive market competition to lower costs."

The health care overhaul, which aims to provide coverage for millions of uninsured people, created a five-year, $250 million grant program to help regulators challenge unreasonable rate hikes.  Starting next year, the 10 percent threshold will be replaced by state-specific marks.  By 2014, states will be able to exclude insurers that show a pattern of excessive rate hikes from insurance exchanges that will help people find coverage.

Source:  www.nytimes.com