Rate Review: How to Challenge Unreasonable Health Insurance Premium Increases

PDATE (August 3, 2015): Obama Administration Urges States to Cut Health Insurers’ Requests for Big Rate Increases, The New York Times.

When health insurance companies want to raise premium rates, states use a process called “rate review” to decide whether proposed increases are justified. Rate review allows the public to comment on the increases in premiums that a health insurance company is proposing. Advocacy organizations can play an important role in preventing unreasonable premium increases and protecting consumers from unfair prices. Below are resources to help organizations participate effectively in the rate review process.

Why should consumer advocates get involved in rate review?

• To challenge unreasonable health insurance premium increases
• To bring transparency to the process for reviewing proposed premium increases

With a significant part of the expansion of health coverage under the Affordable Care Act relying on the private insurance market, health care advocates should 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. And as we have reported, there is room to scrutinize these proposals given the financial health of top insurers. These comments can have a real effect in keeping premium costs in check.

Rate review timeline

Each spring, health insurers file proposed premium rates for many different products. The ACA requires a process for the annual review of potentially unreasonably high rate increases. If a state does not establish an effective process to review rate increases, the Centers for Medicare and Medicaid Services (CMS), a division of HHS, will perform the review.

• May 15, 2015 (or up to June 5 in some states): Health insurance companies offering individual (non-group) or small-group plans must file their proposed rates for plans (those that will be offered in 2016) by May 15 with state and federal regulators. Some states require earlier filings.
• June 1, 2015 (or up to June 19 in some states): By June 1, state regulators or CMS will post justifications of rate increases under review for public comment.
• Late summer/early fall: Regulators and plans will be finalizing the rates.
• October 30 or November 1, 2015: Final rates must be posted publicly. This is just prior to the start of open enrollment for 2016.

Lessons from State Advocates on Challenging Health Insurance Premium Rate Increases

In this blog series from 2014’s rate review season, we describe five of the main steps in the rate review process. Based on interviews with advocates from several states, we explain how to:

1. Prepare for rate review
2. Decide which insurers’ filings to review and whether to use outside expertise
3. Evaluate insurers’ assumptions about future medical costs 
4. Challenge the amount insurers claim they need to have in reserve 
5. Involve consumers in the rate review process 

Rate Review Works

The Colorado Consumer Health Initiative reported that rate review saved consumers as much as $32 million in one year. More recently, in 2014, the work of advocates—including those in New York, Oregon, and Vermont—paid off, as final premiums there were lower than the initial proposals.