A number of private insurance companies in Idaho have submitted rate increase proposals to the state’s Department of Insurance. Normally, the issues would be handled by state regulators, but the federal government will be stepping in to handle the investigation beginning in the fall. This move is inspired by an executive order from Governor C.L. Otter, which has banned the state from adhering to the overarching federal health care law.
Otter’s order means that the state is unable to comply with federal regulations regarding insurance rates. Because the state cannot effectively regulate these rates, that duty defaults to federal officials. Furthermore, according to Idaho’s laws, information regarding the rate hikes cannot be given to the public, and so the companies involved are unknown to consumers.
Beginning September 1st, the Department of Health and Human Services will be in charge of reviewing the rate proposals from insurers. On average, the proposals account for a 10% increase in rates, but given the precedents set in the past, regulators are unlikely to approve any double-digit rate increases. Regulators will also require insurers to submit justifications for why higher rates are necessary.
As it stands, rates are not subject to the approval of Idaho’s Department of Insurance. Proposals are sent to a third party consultant, who determines whether they are excessive or necessary. In the meantime, insurers are free to collect premiums on new rates while their proposals are under review. Federal regulators will put an end to this practice, as the new health care law prohibits insurers from collecting these premiums until after their proposals have been granted approval.