When it comes to protecting consumers from unfair health insurance rate hikes, the ball is – for the most part – still in the hands of state regulators.  Let’s see if they will take it to the hoop.  

The federal Centers for Medicare and Medicaid Services (CMS) has determined that 40 states have an “effective” program for reviewing rate hikes.  In these 40 jurisdictions, state regulators will be responsible for making sure health insurers file required documentation to support their increases and they will review that support to determine whether the hikes are reasonable.  CMS will conduct reviews for consumers in 10 states that it has identified as lacking effective review for at least some health insurance products.  Four U.S. territories will also get federal review.

UPDATE–because it was kind of hard to find the “lacking effective review” states in the linked materials, we’re posting the list here: Alabama, Arizona, Idaho, Louisiana, Missouri, Montana, Wyoming and the territories of American Samoa, Guam, Northern Marianas Islands and Puerto Rico.

The determinations were made as part of a new rule issued under the Affordable Care Act requiring review of rate increases of 10% or more for consumers in non-group or small group coverage, beginning in September.  States, rather than the federal government, have traditionally had oversight of insurance.  But because premium increases are regulated differently in all fifty states – and in some states aren’t regulated at all – the reality has been that consumers in some states get far better protection than consumers in other states.

The rule requiring review of double-digit rate hikes aims to prompt states to do a better job of making sure rates are fair, and the ACA provides funding to states to improve their processes.  But even with the new rule in place, oversight of rate hikes will vary among the states.  For example, CMS found at least 9 states to have effective review of individual market rates, even though state regulators have no statutory “prior-approval” authority to approve or reject rate increases before they go into effect if they are found to be unreasonable.  For small group market rates, about 13 states without prior approval were deemed effective.  In both of these markets, these states include the biggies, California, Illinois, and Texas.  Other states deemed effective have prior-approval authority for at least some health insurance products, but have shown little inclination to conduct careful reviews on behalf of consumers.  Oklahoma, for example, can pre-approve HMO rates, but the state conducts only limited reviews and returned federal grant funds that it received to bolster its data collection and rate oversight.

To truly be effective, some states will need to strengthen their statutes or regulations.  Others will need to hire actuaries, empower consumers through advocates, increase transparency, and provide an avenue for consumer input into the process, such as a rate hearing. 

We think it’s a no-brainer that consumers in Oklahoma should get just as much protection from unfair and unnecessary health insurance premium rate hikes as consumers in Oregon (a state with strong rate review that saved consumers more than $25 million last year).  That’s why we’re calling on those “effective” states to show us just how much they are willing to step up their game for consumers.