Colorado, 45 states, get grants to keep an eye on insurance premiums

Colorado is getting a $1 million federal grant to help keep an eye on proposed health insurance premium increases ahead of new federal health care reform rules. The state will also be able to take action against insurers deemed to be seeking unreasonable rate hikes. The grant award was part of a larger group of grants awarded by the Department of Health and Human Services (HHS) to 45 states and Washington DC.

The awards were included as part of the Affordable Care Act, federal health care reform legislation passed earlier this year. Under the terms if the legislation, states will get $250 million in Health Insurance Premium Review Grants over the next five years. The awards are offered as a way to help states streamline the process for reviewing proposed health insurance premium increases as well as making it easier to hold insurance companies accountable for unjustified premium increases.

Twenty six states – including Colorado – and DC currently have the authority to reject a proposed increase that is excessive, lacks justification or otherwise exceeds state standards. As CivSource reported in June, states like Pennsylvania have already launched investigations into rate hikes ahead of new federal health care reform rules.

In addition to state actions against unreasonable rate hikes, the Affordable Care Act also includes these measures:

  • In 2011, the Affordable Care Act allows the Secretary of the U.S. Department of Health and Human Services to review justifications for unreasonable increases in premiums and make them public;
  • In 2011, insurers will generally be required to spend at least 80 percent of premium dollars on medical care services and quality-improvement activities and limit their spending on overhead, marketing, CEO salaries, and profits; and
  • In 2014, the Affordable Care Act empowers States to exclude health plans that show a pattern of excessive or unjustified premium increases from the new health insurance Exchanges.

In its grant proposal, the Colorado Division of Insurance proposed hiring additional rate financial analysts and actuaries to review rate filings; hiring additional staff in Consumer Complaints and outreach; and web enhancements to make rate filings more accessible and understandable to consumers. In addition to monitoring insurance premiums, Colorado has also launched a temporary insurance pool for people with pre-existing conditions. This pool is available for individuals that lack insurance because of a pre-existing condition and will dissolve when federal rules which prohibit insurers from withholding coverage for this reason go into effect in 2014. is offering a breakdown of how each state will be managing health care resources here.

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