The Pennsylvania Insurance Department has had its authority over insurance rates for small employer health care policies expanded this week. On Thursday, Governor Tom Corbett signed Senate Bill 1336 into law, giving regulators the power to adjust the insurance rates in the small group market. For the first time, state insurance regulators will be able to review and disapprove new rate proposals coming from insurers. They will also be able to require insurers to justify their need for a rate increase and demand changes if necessary.
Insurance Commissioner Mike Consedine believes that the law is a major victory for regulators and small businesses alike. Before the law was signed, the small group market would regularly see higher rates being imposed by insurers who were not required to file a rate increase proposal beforehand. Now the Insurance Department has full authority to review rates and determine whether they are needed or not. Typically, insurers requesting rate increases of 10% or higher will see their proposals fall under review, but regulators will be able to review proposals for increases under 10% as well.
The law will help bring consistency to the state’s review process and will help regulators adhere to federal standards concerning the process. According to federal law, if states cannot maintain an efficient and effective review process, federal regulators will take over and conduct rate reviews themselves.