President Obama with Health and Human Service Secretary Sylvia Burwell
Back when the House and the Senate were hammering out the differences between their healthcare reform bills that would become Obamacare, there was a
glaring problem with the Senate approach that did not include a public option and that won the day. That was the argument that states needed to be kept at the fore in implementing—and most importantly—overseeing health insurers and their compliance with the law. Back then us public option proponents warned about the problem having a mishmash of state regulators with varying degrees of regulatory power and intent being at the center of the law. Now those concerns are being realized to a degree in the process of
premium rate setting.
The federal government wants state regulators to keep health insurance premium hikes modest for 2016, but consistency and strict enforcement elude states' rate review processes.
If states had a more unified, rigorous rate review approach, premiums would likely increase tepidly, or potentially decrease, according to a new study in the journal Health Affairs. […]
The ACA requires all health insurers to publish requested rate hikes of 10% or more, but an insurer can still get its proposed rate increase if it publishes and justifies the higher rate. HHS controls the rate review process for five states—Alabama, Missouri, Oklahoma, Texas and Wyoming—but it concedes ultimate control to the remaining states' hodgepodge requirements.
“The bar is still a little bit lower in the federal rate review regulation,” said Pinar Karaca-Mandic, an associate professor at the University of Minnesota's School of Public Health and a co-author of the Health Affairs study. “It does not really pre-empt states' rate reviews and practices.”
Here's an example of the difference having a tough state regulator makes: "UnitedHealthcare, for example, asked New York regulators for a 22 percent rate increase but only was approved for a 1.7 percent boost." The Health Affairs study found that states like New York, which have the strongest regulatory power over premium increases, are seeing lower increases. "Premiums in states with regulatory power declined 2.1 percent from 2010 to 2013, especially in those states that mandated stringent medical-loss ratios. However, premiums rose 7.6 percent in the same period in states that had no review authority whatsoever."
Note that the problem isn't—as Republicans would argue—that Obamacare is causing insurance premiums to rise. If anything, the competition among insurers on the exchanges is what's keeping premium costs reasonable in the states that don't have stricter regulation. The problem is that Obamacare doesn't really have all the teeth it needs to keep rate hikes in check. That requires strong regulation, which is the last thing Republicans are going to argue for. But the Obama administration should be exploring ways it can clamp down with more oversight of state regulators.