Sunday, June 17, 2012
Insurance Premium Review Is Basically Useless
ACA’s Much Touted Health Insurance Premium Review Is Basically Useless
Wednesday May 9, 2012
In the Affordable Care Act the Department of Health and Human Services (HHS) was given the power to review health insurance premium increases, but it wasn’t given the power to actually do anything about unreasonable increases. HHS can only say an increase is “unreasonable,” but it has zero regulatory power to force the companies to change their premiums. Not surprisingly this totally toothless provision is now proving to be mostly worthless. From Politico:
HHS can use its bully pulpit to publicly shame insurers whose rates don’t pass its sniff test – and HHS has done just that, holding four media calls since November to scold insurers each time it’s made a new “unreasonable” determination.
Faced with the choice of dealing with some negative press on the national stage or upending their business plan, the four insurers that have been dinged by HHS have all chosen to stick with the business plan.
Even though a provision with zero enforcement obviously has almost no value, this hasn’t stopped Democrats from claiming the rating review process is amazing and should be super effective. The White House’s official overview of the law still falsely implies the law has regulatory teeth:
Stopping Unreasonable Rate Increases: In every State and for the first time ever, insurance companies are required to publicly justify their actions if they want to raise rates by 10 percent or more.
The reality is that the law now merely lets us officially know that HHS thinks the rates are “unreasonable,” but it does nothing to actually stop them.
During the drafting of the ACA, efforts were made to include a provision that would give HHS the power to stop unreasonable rate increases, but the provision didn’t make it into the final law. Instead the Obama administration seems to be just pretending it did.
With so much over promising and under delivering around the health care law, it is no wonder it is still unpopular.