The Department of Health and Human Services (HHS) has announced that health insurance rates in nine states are far too high to be reasonable. HHS Secretary Kathleen Sebelius has determined that these rates are excessive under the authority granted to the agency by the Affordable Care Act. The law gives federal and state insurance regulators the authority to review health insurance rate increases of 10% or higher and determine whether they are necessary. The insurance companies in these nine states will be requires to justify their rates or make changes according the guidelines provided by federal regulators.
There has been controversy surrounding the role the HHS plays in the new health care system. Opponents of the federal health care reform law claim that the agency is little more than a gimmick. The agency, however, claims that it has already brought some benefits to consumers in the form of lower health insurance rate increases. Secretary Sebelius has released a report regarding the issue, showing that regulating rate increases of 10% or higher has resulted in fewer insurers looking to raise rates by a double-digit percentage.
In the nine states targeted by the HHS, health insurers are looking to raise rates by an average of 24%. These states do not have a rate review system up to the standards of the HHS, which is why federal regulators have taken over the issue. If the insurers proposing these rate increases cannot justify their actions they will need to make changes to their proposals or wait until next year to try again.