Many states lack power to enforce health reform laws

Earlier this week, the Department of Health and Human Services (HHS) awarded states $46 million, in the first round of grants, to help them crack down on unreasonable health insurance premium hikes. Five states—Alaska, Georgia, Iowa, Minnesota, and Wyoming—did not apply for a grant under this HHS program.

The problem. Why is this money needed? There are gaps in states’ authority to regulate insurance rates as well as to enforce federal health reform’s consumer protections. In fact, currently, only 26 states and the District of Columbia have the authority to reject a proposed increase that is excessive, lacks justification or otherwise exceeds state standards. Even worse, many of the states that have the power to crack down on unreasonable premium increases lack resources to exercise it meaningfully.

Uses for grant money. States expect to use the HHS grants in one or more different ways, including:

• Seeking additional legislative authority: 15 states and the District of Columbia will pursue additional legislative authority to create a more robust program for reviewing or requiring advanced approval of proposed health insurance premium increases to ensure that they are reasonable;
• Expanding the scope of health insurance premium review: 21 states and the District of Columbia will expand the scope of their current health insurance review, for example, by reviewing and requiring pre-approval of rate increases for additional health insurance products in their state;
• Improving the health insurance premium review process: All 46 state grantees will require insurance companies to report more extensive information through a new, standardized process to better evaluate proposed premium increases and increase transparency across the marketplace;
• Making more information publicly available: 42 states and the District of Columbia will increase the transparency of the health insurance premium review process and provide easy-to-understand, consumer friendly information to the public about changes to their premiums; and
• Developing and upgrading technology: All state grantees will develop and upgrade existing technology to streamline data sharing and put information in the hands of consumers more quickly.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.