A provision in the Affordable Care Act that requires insurers to submit all premium rate increases of 10% or more for state or federal review is working, as one in five rate hike proposals in 2011 resulted in a lower rate increase or no increase at all, according to an analysis by the Kaiser Family Foundation, Modern Healthcare reports.
For the study, researchers examined 846 filings for rate increases in 41 states and the District of Columbia. Federally approved state regulators reviewed 798 of the filings while HHS reviewed the remaining 48.
About one in five requests by insurers to change premiums were denied, lowered or withdrawn during state review, the study found.
According to Modern Healthcare, factors that played a role in the review decisions varied by state and market. Among the filings that HHS reviewed and deemed unreasonable, ACA's medical-loss ratio requirement was at least one main factor in the decision (Zigmond, Modern Healthcare, 10/24).
Under the ACA's MLR rule, private insurers must spend at least 80% in the individual market, or 85% in the group market, of premium dollars on direct medical costs. Insurers that do not comply with the ratio must issue rebates to consumers (California Healthline, 9/12).
During the eight-month period before the Sept. 1, 2011, implementation of the rate review provision, 33% of filings requested an increase of 10% or more, the study found. In the last four months, fewer than 18% of filings were for an increase of 10% or more.
The study also found that the average rate change requested would have led to a 6.8% increase in premiums, while the average rate change implemented was 5.4% (KFF report, Oct. 2012).