New rule targeting health insurance being introduced
January 1, 2014, is rapidly approaching, and that means that the Affordable Care Act is on the verge of becoming fully enacted. This also means that health insurance companies throughout the U.S. are scrambling to make sure they comply with the federal law. This has proven very difficult, however, due to the fact that the federal government continues to change many of the provisions of the law. The government continues to issue new rules concerning the Affordable Care Act that require health insurance companies to make modest adjustments to their plans. The frequency at which these new rules are being introduced, however, is beginning to weigh heavily on insurers’ ability to comply with the federal law.
Federal provisions continue to evolve
The Department of Health and Human Services has announced a new rule concerning health insurance rates throughout the country. According to the Affordable Care Act, health insurance companies seeking to raise rates by 10% or more must report their intentions to the federal government. State insurance regulators are required to review rate proposals to determine whether they are justified or not. If states do not have an adequate review process in place, the matter is handled by the federal government. Either way, insurers still report increases of 10% or more to the federal government. That rule is changing.
Rule requires insurers to report all pricing changes
According to the new rule introduced by the Department of Health and Human Services, insurers must report all changes in pricing to the federal government, no matter how small they may be. This means that even if a health insurance companies wants to raise rates by a scant 1%, it must report this action to federal regulators. The agency suggests that this rule is meant to help keep track of the impact of the Affordable Care Act.
Rule may help mitigate rate shock
The new rule is expected to help identify patterns that indicate market disruption in relation to the federal health care law. Once these patterns are identified, the federal government can take steps to mitigate the disruption they cause. The rule will also help regulators address growing concerns regarding rate shock, a phenomenon brought about by sudden and dramatic health insurance rate increases.
