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NAIC: Rate Oversight Important Step in Addressing Rising Healthcare Costs

Source: NAIC

Posted on 08 Mar 2010

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Members of the National Association of Insurance Commissioners (NAIC) met last week with President Barack Obama and Health and Human Services Secretary Kathleen Sebelius to discuss rate increases in the health insurance industry. The meeting, which also included top health insurance executives, was called to address recent significant rate increases as part of a larger discussion on how to improve health insurance markets for all consumers.

State regulators stressed the importance of thorough and objective rate review, adding that premium increases must be actuarially justified without discriminating unfairly against any groups of policyholders.

“State regulators are best positioned to perform rate review and many of us do so with great success,” said Jane L. Cline, NAIC President and West Virginia Insurance Commissioner. “Some, however, have not been given the authority by their state legislatures to review and deny unjustified increases. We believe that a federal backstop could help encourage these legislatures to provide that authority.”

“It is absolutely critical that the state role in assuring the solvency of health plans and promoting competitive markets be preserved,” said Sandy Praeger, Chair of the NAIC Health Insurance and Managed Care Committee and Kansas Insurance Commissioner. “Protecting consumers from high premiums remains a priority, but it is even more important to protect them from insolvency.”

Vice-Chair of the NAIC Health Insurance and Managed Care Committee and Pennsylvania Insurance Commissioner Joel Ario pressed insurers to support reforms that would reduce the fragmentation of health insurance pools. “One problem with premium increases is that rates go up a lot more for some people than for others,” he said, noting that premiums in a reformed marketplace would be more stable for all Americans.

Today’s discussion was part of a broader call for the stabilization of the markets. Key provisions of the President’s proposal and the bills in Congress would promote this stability by ending discrimination based upon health status, pooling risk more broadly, bringing everyone into the market and ensuring that most of the premium dollar goes to paying claims. _