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Caveat Emptor

Just in case any of you think that the insurance companies might raise rates sky high under health reform, I thought you might be interested in the following. The Obama administration has awarded 45 states $1 million to help them rein in premium increases that have reached as high as 30% per year in some cases and doubled on average over the past 10 years. The grants were announced Monday, August 16th — the first round of a $250 million, 5-year program included in the new healthcare reform law. Some states have full and rigorous rate review and the right of prior approval, so before a company raises a rate it goes through intense actuarial analysis.  . . In other states, the company doesn’t even have to file with state authorities.

Starting next year, the new healthcare law authorizes the Department of Health and Human Services to review and publicize rate increases it deems “unreasonable” according to rules being written. However, reviewing and publicizing are a far cry from regulating and controlling these increases. It will not be until 2014 that states (not the Feds) will have the power to punish insurers by excluding them from subsidized state-run insurance markets (exchanges) if their rates are too high. Of course, it is up to each state to exercise that option, just as the degree to which they review rate increases will be left to their discretion. Indeed, five states — Alaska, Georgia, Iowa, Minnesota, and Wyoming — chose not to review rate increases for the first round of rate review grants.

Although insurance companies argue that rates are driven up by factors beyond their control, critics point to California’s success in stopping Wellpoint’s attempt earlier this year to raise rates by as much as 39%…The fact that they did so within days of having to testify before a congressional committee leaves one wondering “What were they thinking?” Carpe diem, indeed! States and politicians may not have the right to reject rate hikes, but their power still is formidable.

So, what does all this mean for you and me? The employed will benefit – as will their employers – if health insurance premium increases are kept down (perhaps indexed to inflation?). The self-employed will benefit…and the unemployed will also benefit if they buy their own insurance. However, personal and institutional providers can be sure that private insurers will look even more closely at claims…and find even more reasons to deny them. Caveat emptor

Leah Curtin


  1. As a case manager, I have had many struggles with indurance companies. However, I ave found that most of them are reasonable if there is a good reason for the service. no business is perfect, and certainly every business needs to make money, but in most of the instances I have dealth with, the major insurance companies have been responsive to the needs of their clients.

  2. As long as we look to private insurance, profit will be their foremost concern. Our country spends 30% or more of our healthcare dollars on trying to sort out all the reimbursement complexities. When will we ever learn!

  3. If the hospitals and health agencies push us any harder than they do now, there will be more errors and more lawsuits – this may be ‘peeny-wise’ but it’s pound foolish! And if salaries are cu, there will be even more union activity – and I, for one, will join!


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