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  • Insurance Carriers Now Required To Justify Premium Increases

      U.S. health insurance carriers will have to justify big premium rate hikes effective September, 2011  under new rules issued by the U.S. Health and Human Service Department   Insurers will have to publicly post proposed rate increases for the small group and individual markets. Any increase of 10% or more will have to undergo review by independent experts at the state or federal level, the agency said.

    These rules were signed into law last year under health care overhaul.  HHS Secretary Kathleen Sebelius said her department will provide greater scrutiny of health insurance premium rises at a time when insurers are demanding premium increases, even as they enjoy lower costs and huge profits.

    “Even though insurers are seeing lower medical costs as people put off care and treatment in a recovering economy, insurance companies continue to raise their rates. Often these increases come without any explanation or justification,” she added.

    Results of reviews will be posted on the HHS Website, and insurers will be required to post that information on their sites as well, she said.

    While federal regulators cannot set health insurance rates, Sebelius said a growing number of states have this authority.  Sebelius said her agency was working closely with states to undertake the review process. HHS will take over in cases where a state does not take up the responsibility.

    The 10% threshold will be replaced in September 2012 by a state-specific threshold that takes into account trends in a state’s health care market.

    Steve Larsen, director of HHS’s Center for Consumer Information and Insurance Oversight, said the current rule applies only to the individual and small group market but that the agency was seeking comment on applying the rules to groups that purchase coverage through associations.

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