Private Health Insurance: State Oversight of Premium Rates and Changes in Response to Federal Rate Review Grants

This testimony discusses state oversight of health insurance premium rates in 2010 and changes that states that received Department of Health and Human Services (HHS) rate review grants have begun making to enhance their oversight of premium rates. In 2009, about 173 million nonelderly Americans, about 65 percent of the U.S. population under the age of 65, had private health insurance coverage, either through individually purchased or employer-based private health plans. The cost of this health insurance coverage continues to rise. In a 2010 survey, over three-quarters of U.S. consumers with individually purchased private health plans reported health insurance premium increases. Of those reporting increases, the average premium increase was 20 percent. A separate survey found that premiums for employerbased coverage more than doubled from 2000 to 2010. Policymakers have raised questions about the extent to which these increases in health insurance premiums are justified and could adversely affect consumers. Oversight of the private health insurance industry is primarily the responsibility of individual states. This includes oversight of health insurance premium rates, which are actuarial estimates of the cost of providing coverage over a period of time to policyholders and enrollees in a health plan. While oversight of private health insurance, including premium rates, is primarily a state responsibility, the 2010 Patient Protection and Affordable Care Act (PPACA) established a role for HHS by requiring the Secretary to work with states to establish a process for the annual review of unreasonable premium increases. In addition, PPACA required the Secretary to carry out a program to award grants to assist states in their review practices. Since the enactment of PPACA, members of Congress and others have continued to raise questions about rising health insurance premium rates and states' practices for overseeing them. This statement will highlight key findings from a report we are publicly releasing today that describes state oversight of health insurance premium rates in 2010 and changes that states that received HHS rate review grants have begun making to enhance their oversight of health insurance premium rates. For that report, we surveyed officials from the insurance departments of all 50 states and the District of Columbia (collectively referred to as "states").