Federal auditors will soon start analyzing insurance rate increases for small-group health insurance plans in Pennsylvania.
Starting Sept. 1, companies will have to report rate increases of 10 percent or more. If federal reviewers deem the increase “unreasonable,” insurers will have to justify the new rates online at healthcare.gov, so consumers can understand why they are paying more.
The rule, part of the Affordable Care Act, does not give federal authorities power to do anything about costs it deems too high. The idea, said Gary Cohen, acting director of the federal Center for Consumer Information and Insurance Oversight, is that increased transparency will keep costs down.
“Even just shining the light on these increases works, and has an effect,” Cohen said. “It has an effect both in terms of what companies will ask for,” and, he said, will allow insurance commissioners to use their bully pulpits to talk down companies who post high rate increases.
Lance Haver, director of consumer affairs for the City of Philadelphia, said the transparency can be only a good thing for customers.
“To the extent that shining a bright light on insects does good, that’s what this will do,” Haver said.
But he argues that more regulation would be better.
“Hopefully, when we see just how bad it is, that will get our elected officials into action to bring us adequate legislation and adequate regulation,” Haver said.
Pennsylvania already regulates insurance sold to individuals, but it does not have the power to oversee small-group sales, which is why the feds are stepping in. They are doing similar work in nine other states where regulatory systems do not meet standards set by the new health-care law.