People are giving up some healthcare they need because they cannot afford it. Not elective surgery like tummy tucks and facelifts. Needed care. People cannot afford the higher deductibles, rising co-pays, and increasing Premiums for individual Health Coverage and for their share of Group Health Plans. At the same time, in exchange Health Insurance Companies are charging increasingly higher prices and obtaining increasingly higher profits. See, e.g., Post on May 15, 2011, "When Premiums for Personal Health Insurance Policies Rise, Healthcare Decreases".
The Federal Government issued a Rule on Thursday of this week that takes effect in September. Health Insurance Companies are already howling. The "final rule" will require Health Insurance Companies to "justify" Premium Increases of greater than 10%. What they will be required to do to "justify" their Rate Requests is not publicly reported at this time.
However, the Rule will require the following:
- Federal and State Insurance officials will review Premium Rate Increase Requests from Health Insurance Companies "in the individual and small-group insurance markets."
- The Federal Healthcare Law mandates annual reviews for "unreasonable increases in premiums."
- "Unreasonable" Health Coverage Premium increases reportedly include excessive increases, unjustified increases (without further explanation available in the public reporting at this time), or Premium increases that are "'unfairly discriminatory.'"
- "Excessive" increases in Health Coverage Premiums, in turn, reportedly include increases that are "'unreasonably high in relation to the benefits provided.'"
- State review processes must include the opportunity for public comment.
- Although Federal officials cannot block Premium Rate Requests, many State Insurance Commissioners can, and if the States will not or cannot review the increases, Federal officials will undertake a review of the Health Coverage Premium increases.
The most important feature of these Rule requirements will center around the requirement that Health Insurance Companies "justify" (in some fashion not widely known, at present) their Premium increases whenever and wherever the Rule applies and the Health Premium increases are greater than 10%. At present, Health Insurance Companies in many instances do not have to justify any Premium increases in these markets.
The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the Insurance Coverage Litigation Committee of the American Bar Association.
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