Delaware could veto insurance rate hikes

Delaware’s insurance commissioner will serve as gatekeeper for health insurance rates.

A new law gives Delaware’s Insurance Commissioner the power to regulate the price of health insurance. Companies that want to change their rates for patients who live in Delaware now have to submit a proposal to the department for approval.

Listen: [audio:090709teinsure.mp3]

Linda Nemes is a research analyst in the insurance department.

Nemes: This process that we will be going through is to assure that the benefits received by the consumer are reasonable in relation to the premium they are paying. We would not want an insured paying $100 in premium and only getting $10 in benefits.

Delaware is still drafting its own regulations. But other states require companies to spend a hefty portion of premium revenues on health claims, instead profit or administrative costs.

Health insurance lobbyist Robert Zirkelbach says conflicting state regulations drive up the cost of health insurance.

But Zirkelbach says the national health reform debate includes a proposal to create uniform health insurance rules across the country, and that could override Delaware’s new rules.

Zirkelbach: A lot of this type of regulation is likely to change in one form or another, so we are likely to see a lot of new developments in the coming months.

The insurance department will review proposals for premium increases, and Commissioner Karen Weldin Stewart will serve as gatekeeper.

She says she’ll make sure that premium increases are justified by company expenses and the benefits provided to policyholders.

Stewart: The top five companies hold approximately 88 percent of the market with the top company holding roughly 50 percent of the market. With so few carriers and such large numbers of consumers this will help us to put a competitive monitoring on the rates that are being charged.

New Jersey regulates a portion of that state’s health insurance market. Those companies have to spend at least 80 percent of their premium revenues on health claims. Other dollars can go toward profit or administrative costs.

Some larger companies — like Dupont — will be excluded from the new rules. Those benefits plans are regulated by the federal government.