Health insurers to be required to justify double-digit rate increases Posted: December 23rd, 2010

In a press statement that refers to double digit health insurance premium increases as 'unreasonable,' the Department of Health and Human Services (HHS) announced new regulations regarding rate hikes. In 2011, any insurer wishing to raise rates by 10 percent or more will be required to publicly justify the increase.

The new regulations build upon provisions of the Affordable Care Act that seek to create more transparency within the practice of rate setting. In August, the HHS awarded $46 million to 45 states and the District of Columbia to assist their regulatory agencies in reviewing health insurance rate requests. Overall, the health reform legislation set aside $250 million that can be used by states to take action against unreasonable premium hikes.

Jay Angoff, director of HHS' Office of Consumer Information and Insurance Oversight, said in a statement, "The proposed rate review policy will empower consumers, promote competition, encourage insurers to do more to control health care costs and discourage insurers from charging premiums which are unjustified."

While all rate increases exceeding 10 percent will be subject to public disclosure and review in 2011, state-specific thresholds will be determined for subsequent years. Those levels will be calculated using data and cost trends for each state.