A major provision of the Affordable Care Act is about to come into play. Beginning yesterday, September 1, health insurance companies will be subjected to stricter scrutiny when it comes to raising premiums. When proposing rate increases, insurers will now have to submit written justification for their want of higher rates. These justifications will be open to the public for the sake of transparency and insurance regulators will be able to reject rate proposals if the justifications are not satisfactory.
The new rule is meant to curb the seemingly relentless tide of higher insurance premiums that continues to sweep across the nation. Many insurance companies have been rampantly raising their rates to keep up with the costs of medical care, or so they claim. In the past two years, insurers have been reporting record profits, making their justifications for higher rates somewhat dubious.
Most states will conduct their own rate reviews, which will be handled by insurance regulators. Nine states will relinquish this duty to the Centers for Medicare and Medicaid Services, who will fill the role until these states can adopt laws that will allow them to effectively review rates.
Insurers have balked at the notion of having to justify their rate proposals at length, especially if consumers are able to examine such justifications. Their concerns, however, are not shared by lawmakers in most states, who are more interested in consumer protection than corporate complacency.