States Begin Applying Health Reform Insurance Provisions

Some states have already started applying certain rights and responsibilities assigned them by the Patient Protection and Afordable Care Act (ACA). States’ focus largely has been on monitoring and restraining insurers’ premium rate increases and in establishing health insurance exchanges.

In California, the state’s insurance commissioner, has asked Blue Shield of California to delay by 60 days a rate increase for nearly 200,000 policyholders. For some, the rate increase could be as high as 59%. It would be the third hike since last fall. Currently, the state does not have the authority to stop health insurers from increasing premiums, but a bill in the state legislature would require health insurers to receive approval from the state before raising premiums.

The Connecticut department of insurance rejected as “excessive” a 20% rate increase requested by Anthem Blue Cross and Blue Shield, the state’s largest health insurer. The premium increase would have affected 48,000 consumers. This is the first time that the state has flatly rejected a rate increase.

The Iowa Health Care Coverage Commission has voted 10-1 in favor of having the state form a health insurance exchange. The initial version of Iowa’s insurance exchange will offer basic information about prices and coverage of health insurance policies to help individuals and small businesses purchase insurance. Under the ACA, if states decline to set up their own exchanges, the federal government will do it for them.

The Health Reform Coordinating Council in Maryland, created through an executive order, issued a report recommending the creation of a Governor’s Office of Health Reform to guide the state’s implementation of the ACA and oversee the state’s new health insurance exchange. The Council also recommended that the health insurance exchange be established as an independent public entity, rather than as a private nonprofit entity.

South Dakota residents have access to a state-developed website with information about the ACA. The site is a resource for consumers, employers, and stakeholders in health care and outlines the initial steps the state government is taking to implement the federal law.

The Washington state insurance commissioner plans to ask state legislators to preserve the commissioner’s authority to approve health insurance rates, boost transparency, and to allow the insurance department to consider some insurers’ surpluses when reviewing rates. Currently, the state insurance department is not allowed to consider an insurer’s surplus, including investment income, when reviewing a rate request. The surplus proposal would apply only to nonprofit insurers, which account for most of the health insurance market in Washington. Specifically, the commissioner proposes denying rate hikes when a company amasses a surplus equal to three months of claims expenses. However, exceptions to that rule may be granted if limiting a rate increase threatens an insurer’s financial health. The state insurance department also would like to add more transparency to the rate-review process, insurers’ finances, and medical trends.

Wyoming has begun working on a plan to provide health insurance to the 86,000 uninsured individuals in the state. A 17-member task force has started work on the job of recommending a plan for the state’s health insurance exchange, which will go into effect in 2014 as a part of the ACA. Health insurance exchanges will lead to lower costs and increased competition, according to supporters.

More information about provisions of the Patient Protection and Affordable Care Act is available here.