Using rate review to make health insurance more affordable
- Collection:
- Health Policy and Services Research
- Series Title(s):
- State strategies for controlling health care costs implementation guide
- Author(s):
- Hwang, Ann, author Bailit, Michael, author
- Contributor(s):
- Commonwealth Fund, issuing body.
- Publication:
- [New York, New York] : The Commonwealth Fund, January 2023
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Cost Control Insurance, Health -- economics Rate Setting and Review State Government United States
- Genre(s):
- Technical Report
- Abstract:
- Health insurers are typically required to file their proposed rates for individual and small-group health plans with state regulators every year. These rates form the basis of premiums that consumers and businesses will be asked to pay. Rate review is a mechanism that gives state regulators the opportunity to review, and in some cases, disapprove or modify, proposed health insurance rate increases. By examining and constraining costs in the commercial market, rate review is an essential component of states’ comprehensive oversight of health care costs. The Affordable Care Act (ACA) built on states’ existing authority to conduct rate review by providing grants to strengthen their rate review processes. It also required states either to be recognized as operating “effective” rate review programs or to default to a federal process. The ACA-mandated rate review process requires insurance carriers to file and publicly justify the reasonableness of proposed rate increases in the individual and small-group market over a certain threshold (currently 15%). States have additional statutory and regulatory authority to regulate health insurance rates, to varying degrees. And some states have been particularly noteworthy in using their regulatory authority to advance rate review policies to achieve more affordable health coverage for consumers and businesses. For example, Rhode Island’s health insurance commissioner is directed to “view the health care system as a comprehensive entity and encourage and direct insurers toward policies that advance the welfare of the public through overall efficiency, improved health care quality, and appropriate access” (R.I. Gen. Laws section 42-14.5- 2). This has led the state to create a set of affordability standards that advance the adoption of alternative payment models, price growth caps, and other strategies to encourage value-based health care and control costs Stronger rate review authority--specifically, prior approval authority that requires rates to be approved in advance by regulators--has been associated with lower premiums in the individual market. The following steps present a sequence of important decisions states must work through. States should be prepared for a process that is both iterative, where questions may need to be revisited over time, and dynamic, to account for new questions and answers that may emerge. Step 1. Establish goals for strengthening rate review policies and confirm readiness to proceed. Step 2. Assess whether additional statutory authority for rate review is desired or needed. Step 3. Consider opportunities to use the rate filing and review processes to support affordability efforts within existing authority. Step 4. Consider opportunities to align the rate filing and review processes to support the state’s broader affordability and cost growth mitigation strategies. Step 5. Promote public education and transparency about health insurance rates. Step 6. Engage stakeholders in the effort, including insurers and executive and legislative branch leadership. Step 7. Design, implement, monitor, and evaluate the program with equity at the center. Step 8. Monitor and evaluate the program’s impact.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)
- Extent:
- 1 online resource (1 PDF file (8 pages, 1 unnumbered pages)).
- NLM Unique ID:
- 9918540687306676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918540687306676