Kaiser Study: State Capacity to Regulate HI Premiums Varies Widely

• Kaiser study: States’ abilities to regulate insurance premiums highly variable: A recent Kaiser Family Foundation study examined laws in all 50 states and interviewed state department of insurance leaders in ten to assess preparedness of states to implement health insurance premium oversight provisions of PPACA. The study conclusions were:
  • A state’s statutory authority often tells little about how rate review is actually conducted in the state… The rigor and thoroughness that states bring to rate review can vary widely, and some states had little express statutory authority to disapprove rates prior to their use.
  • In many cases, statutory authority to disapprove rates does not extend to all market participants. A number of states only require certain carriers to undergo rate review and exempt other commercial carriers.
  • Most states interviewed use a subjective standard to guide the review and approval of rates. Common standards are that rates cannot be “excessive, inadequate, or unfairly discriminatory,” or that “benefits are reasonable in relation to premiums charged.”
  • Most of the states interviewed have made little or no effort to make rate filings transparent. Generally, states require the public to physically visit the department of insurance to access the documents in a rate filing. And many states allow carriers to designate some portions of the rate filing to be “trade secret” and thus not available to the public.
  • Many states lack the capacity and resources to conduct an adequate review. Many states do not have a sufficient number of trained actuaries to review all filed rates. In addition, statutory clauses that deem a rate approved if it is not acted on within 30 or 60 days can limit a state’s ability to conduct a thorough review.

States have a long way to go on this front.