Maine is Cracking Down on Unreasonable Health Insurance Premium Hikes
For too long, insurance companies in many States have increased health insurance premiums with little oversight, transparency, or public accountability. Some States have both the authority and the capacity to review insurers’ proposed health insurance premium increases. Just 26 States and the District of Columbia have the authority to reject a proposed increase that is excessive, lacks justification or exceeds certain standards. Many do not and some who have the authority lack the right tools to exercise that authority to reject excessive premium increases. This lack of authority and resources for States has unfortunately contributed to unjustified premium increases. Health insurance premiums have doubled on average over the last 10 years, much faster than wages and inflation, putting coverage out of reach for millions of Americans and business owners.
The Affordable Care Act provides States with $250 million in Health Insurance Premium Review Grants over five years to help states like Maine help transform the way they review proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.
On August 16, the Department of Health and Human Services announced the award of $46 million in the first round of these grants, including $1 million for Maine. The following is a general summary of how Maine intends to use its funding:
- Expand the Scope of the Review Process: Currently, Maine has prior approval review authority for all individual and small group market products. Carriers may elect to meet a three-year average medical loss ratio guarantee (meaning they will spend a certain percentage of premium dollars on medical care rather than overhead or profits) and avoid prior approval in the small group. Maine will expand its current practice of health insurance premium review by collecting and analyzing small group market data from carriers electing the loss ratio to inform the Department if additional statutory authority is needed.
- Improve the Review Process: At present, Maine’s informational filings lack sufficient detail to determine full compliance with the law. The State plans to collect additional information on small group rates. Additionally, Maine will collect historical and projected cost and utilization trend data to establish benchmarks.
- Increase Transparency and Accessibility: Maine posts extensive rate filing information on its website, and encourages consumer participation in the rate filing process by hosting field hearings in addition to formal hearings. Maine will encourage increased participation of consumer advocacy groups in rate hearings and will compile submitted rate filing information into a consumer-friendly format for posting on its website.
- Develop and Upgrade Technology: Maine will upgrade its systems to improve efficiency and aid in the health insurance premium review process. The State will also establish a data center to compile and publish fee schedule information.
The Health Insurance Premium Review Grants are one element of a broad effort under the Affordable Care Act to reduce the unsustainable rates of increase proposed by some insurers today. Additional resources from this $250 million program for rate review will be available in subsequent years to further strengthen State health insurance premium review procedures.