Insurance Premium Rate – Premium Regulation

Department of Insurance Rate Regulation
authority to lower rates

The CA Department of Insurance (DOI) has authority to “push” rates increase down, as premium increases must be certified to be actuarially sound, but the DOI does not have authority to establish rates.  ^{Modern Health Care 4.22.2015 DOI RIPS    Anthem Rate Hikes on Grandfathered Plans}

Please note though, under Health Care reform the 80% Medical Loss Ratio (MLR) rule, where rebates must be given if are not enough claims paid out.

National Association of Insurance Commissioners  5 page summary & introduction on Rate Regulation 

The #rate review process of Medical Loss Ratio 

The rate review process of Medical Loss Ratio  does not presume that an increase above 80% is unreasonable,

***Please note, this may be prior to ACA/Health Care Reform.  Check our citations below

nor does it prevent issuers from increasing rates.  The process only requires such increases be reviewed and that certain information be made public.   When HHS reviews a rate increase, HHS will determine that the rate increase is unreasonable if the increase is:

• Excessive – meaning the increase causes the premium charged for the health insurance coverage to be unreasonably high in relation to the benefits provided.
• Unjustified – meaning the data or documentation the issuer provides to HHS in connection with the increase is incomplete, inadequate or otherwise does not provide a basis upon which the reasonableness of an increase may be determined.
• Unfairly discriminatory – meaning the increase results in premium differences between insured’s within similar risk categories that (1) are not permissible under applicable state law or (2) in the absence of an applicable state law, do not reasonably correspond to differences in expected costs.

The examination must include an analysis of all of the following:

• The impact of medical trend changes by major service categories
• The impact of utilization changes by major service categories
• The impact of cost-sharing changes by major service categories
• The impact of benefit changes
• The impact of changes in enrollee risk profile
• The impact of any overestimate or underestimate of medical trend for prior year periods related to the rate increase
• The impact of changes in reserve needs
• The impact of changes in administrative costs related to programs that improve health care quality
• The impact of changes in other administrative costs
• The impact of changes in applicable taxes, licensing or regulatory fees;
• Medical loss ratio
• The issuer’s risk-based capital status relative to national standards ^{(Blue Cross Memo on Rate Review) 6/2011 Update 154.205 Federal Regulation}