Health Insurance Rate Hikes and The Affordable Care Act

New proposed Affordable Care Act regulations announced on Dec. 21, 2010 by the U.S. Department of Health and Human Services (HHS) will bring new transparency and scrutiny to proposed health insurance rate increases. These proposed rules allow HHS to work with states to require insurers to publicly disclose and justify unreasonable rate increases. In 2011, proposed rate increases of 10 percent or higher will be publicly disclosed and thoroughly reviewed to determine if the rate increase is unreasonable (http://www.hhs.gov/news/press/2010pres/12/20101221a.html).

How the people at the HHS chose an increase of 10 percent or higher is not clear from the news release. They report that since 1999 average premiums for family coverage have risen 131 percent. If this number is accurate, then 131 percent divided by 11 years equals 11.9 percent per year increase in the average premium for family coverage. It seems excessive to me.

However, what does the cutoff of 10 percent requiring public disclosure and review do? An increase in premium of 9.9 percent would not require public disclosure or review. If this interpretation is correct, then 11 years x 9.9 percent per year equals an increase of 108.9 percent, over the next 11 years. Although less of an increase, it doesn’t look like a great benefit for the average person, who could still see a 9.9 percent yearly increase in health care premium.

Also, it is not clear that the new proposed regulations would look at increasing deductibles, co-pays, and other dollar-garnering mechanisms put into play by the insurance companies.

Do these proposed regulations do anything but offer the healthcare insurance business an excessive allowance for premium increases, i.e., 9.9 percent per year? I repeat the question, “What happened to the public option?” It seems to me that this Congress, controlled by the Democrats, gifted the health insurance industry, while putting into play clever rhetoric, which attempts to make it look like they are controlling the health insurance industry.

Isn’t rhetoric just grand?

R. Garth Kirkwood, MD

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