States With Stronger Health Insurance Rate Review Authority Experienced Lower Premiums In The Individual Market In 2010–13

Health Affairs
Vol. 34, No. 8
August 2015
Karaca-Mandic, P., Fulton, B.D., Hollingshead, A., and Scheffler, R.M.

States have varying degrees of review authority over health insurance carriers’ rates, including prior approval authority over proposed rates and requirements for loss ratios, the proportion of premium revenues spent on medical claims. The Affordable Care Act (ACA) requires carriers in certain categories of health insurance to provide public justification for rate increases of 10 percent or more. The researchers collected data on how states changed their rate review authority and requirements during 2010–13, the years immediately after enactment of the ACA, and they combined these data with carrier filings. They found that adjusted premiums in the individual market in states that had prior-approval authority combined with loss ratio requirements were lower in 2010–13 ($3,489) than premiums in states with no rate review authority or that had only file-and-use regulations, which gave the states no authority to block rate increases ($3,617). Adjusted premiums declined modestly in prior-approval states with loss ratio requirements, from $3,526 in 2010 to $3,452 in 2013, while premiums increased from $3,422 to $3,683 in states with no rate review authority or file-and-use regulations only. Their findings suggest that states with prior approval authority and loss ratio requirements constrained health insurance premium increases.

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