NY Times Reports - Behind Double-Digit Premium Increases

National health care spending has been rising at an unusually low rate for three consecutive years. Yet health insurance companies in some states with lax regulations are requesting and winning double-digit premium increases for some customers. That jarring discrepancy suggests that both the federal government and the states need more power to reject premium increases that can’t be justified.

The Affordable Care Act requires that proposed premium increases of 10 percent or more for small businesses and for individuals who lack employer coverage must be reviewed by state or federal regulators to determine if they are reasonable. Most states can reject increases found to be unjustifiable. But some states cannot; they simply rely on public disclosure to deter insurers from getting too greedy.
      

For example, in California, which lacks the power to deny excessive rate increases, three major insurers are proposing premium rate increases for 2013 of as much as 20 percent, 22 percent, and 26 percent for some policyholders. In New York, however, the rate increases for 2013 are far lower than what insurers requested because state law allows state regulators to roll back unjustified increases. For individual policies, the insurers sought an average 9.5 percent increase but were granted only 4.5 percent. For small groups, insurers asked for 15.8 percent but were approved for 9.6 percent.

      

For now, the slow rate of growth in national health spending — a modest 3.9 percent annually in 2009, 2010, and 2011, the lowest annual increases in the 52 years the government has been collecting such data — is good news. But experts don’t know whether this is a temporary, recession-related slowdown or a permanent downward trend. Insurers often claim that high premiums for individual policies are driven by rising medical costs in some states and younger and healthier people forgoing insurance in the slow economy, leaving only sick and costly patients signed up for insurance. That rationale should disappear in 2014 when virtually all Americans will be required to buy insurance or pay a penalty.