Affordable Care Act rule aims to increase transparency, moderate premium costs

Last week, the Department of Health and Human Services issued a final regulation to protect consumers from unreasonably large increases in their health insurance premiums. On September 1, 2011, it will be required that premium increases of 10% or higher be thoroughly reviewed by states and federal officials. In September 2012, that 10% threshold will change to a percentage varying by state in accordance to its specific health and insurance trends.

HHS has been working with the states to improve their oversight capabilities, and has additionally awarded them $44 million in Affordable Care Act grants. Another $200 million will be available to the states as well. This new regulation, combined with other protections from the Affordable Care Act, should help to moderate premium hikes, and ultimately provide the consumer with more value for their premium dollar.

The rule also requires that insurance companies provide the consumer with clear, easily understandable reasons for any “unreasonable” rate increase (again, 10% until Sept. 2012). These justifications must be posted by the insurance company on both their own website and HHS’ Affordable Care Act website ( 

Significant premium increases will be up for review not only the states, but also the consumers. When reviewing rate increases, states must provide the public with an opportunity for input. With this rule, transparency can help to lower costs, and consumers will have a chance to have their say in determining a reasonable premium cost.

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