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Thursday, Aug. 11, 2011 01:53 pm

Illinois tiptoes toward regulating insurance rates

Feds require state to get more involved

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Before national health reform became law, if Illinois health insurers wanted to increase their rates, most were not even required to inform the Illinois Department of Insurance of that rate change.

Although the Illinois Department of Insurance now has access to rate changes, it still lacks authority to approve or deny unreasonable insurance premium rate increases. Last year, Illinois was one of two states in the U.S. that did not review rates, according to a study done by the United States Government Accountability Office (GAO).    

John Dicken, a director for health care issues at GAO, says Illinois received a $1 million federal grant last year to create a system for collecting, analyzing and publishing rate review filings, in addition to hiring staff to help with rate review.

Then in July of this year, after Illinois received the grant money, the U.S. Department of Health and Human Services (HHS) listed Illinois as having an effective rate review process.

“It doesn’t necessarily mean that the state would be approving rates, it just means that they have to have the capacity to be able to review,” Dicken says.

Kate Gross, assistant director for health planning at the Illinois Department of Insurance, says Illinois still lacks the authority to approve or deny rates. The department has in the past asked for legislation to allow it to have that authority. But so far the General Assembly hasn’t acted on that request.

All of the states surrounding Illinois have the authority to approve or deny insurance increases, but at present, Illinois does not, Gross says.

Under the Patient Protection and Affordable Care Act (ACA), significant rate increases in all states must be reviewed and disclosed to the public.

Starting Sept. 1, the ACA requires that insurance plans with rate increases of 10 percent or more for non-grandfathered plans in the individual and small group markets must publicly disclose proposed increases and the reasoning behind them. Insurers will post the information and their justification for rate increases on their own website, as well as on www.healthcare.gov, starting in September.

Dr. James Galloway, assistant U.S. surgeon general and acting regional director for U.S. Department of Health and Human Services (HHS), Region V, says experts will review rate increases to determine whether or not they are unreasonable. If a state cannot provide the experts or does not have the authority to conduct actuarial rate reviews, HHS will conduct the reviews. HHS has certified Illinois’ rate review process, as it meets the requirements of the ACA, Gross says.

Then starting on Sept. 1, 2012, the 10 percent threshold will be replaced with a state-specific premium threshold, to better reflect the insurance and health care cost trends in Illinois, Galloway says.

Although determining whether a rate increase is reasonable is required by federal law, Gross says approving or denying a rate increase is a matter of state law, not federal. And Illinois still lacks the authority to regulate rates.

Premium rate increases can be necessary in cases where health services are expensive, but in cases where the service costs are low, premium rate increases are “not in the best interest of the consumer,” Gross says.

The ACA has allowed for Illinois to acquire the resources to be able to understand the rationale behind premium increases, which Illinois has not been able to do before, but it’s only the first step, she says.

“The next step would be to empower the Department of Insurance to actually be able to act upon premium increases that are truly unreasonable,” Gross says.

Contact Hannah Douglas at hdouglas@illinoistimes.com.

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