The Association of State Rate Review Authority with Health Insurance Premiums

October 2015

During the past decade, increases in health insurance premiums have exceeded the rate of inflation, particularly in the individual and small group markets, with significant variation among states. The federal rate review regulation in the Affordable Care Act (ACA) requires health insurance carriers to file and publicly justify proposed rate increases of 10 percent or more. States’ regulatory authority over carriers’ rates takes a variety of forms, including “file-and-use” and “prior approval.” The ACA also requires carriers to adhere to the federal medical loss ratio requirement, which is the proportion of premium revenues spent on medical claims.

In a HCFO-funded study, Richard Scheffler, Brent Fulton, Ann Hollingshead, University of California, Berkeley; and Pinar Karaca-Mandic, University of Minnesota, conducted the first evaluation of state rate review authority in the individual market during the years immediately following the ACA’s enactment (2010–2013), with an emphasis on whether state rate regulation, coupled with state anticipated loss ratio requirements, tempers increases in health insurance premiums.