In July 2011, the U.S. Government Accountability Office (GAO) issued a report to Congress entitled “Private Health Insurance: State Oversight of Premium Rates”. 13 The study set out to: (1) describe state methods for overseeing health insurance rates, and (2) examine the changes 41 states receiving DHHS review grants had made to their review process. GAO gathered information through a survey of states and case studies in five states. The report concluded there was considerable variation in the practices of states in review authority and the data that carriers were required to submit. About one-third of states had either enacted or introduced legislation to obtain additional authority to oversee premium rates. Two-thirds of states reported building their capacity to review rates through the hiring of additional staff or contracting with private actuaries. The GAO study did not collect or analyze data from state rate filings.
To our knowledge, this study funded by DHHS-ASPE is the first attempt to build a national database of rate filings from state insurance departments. At the time the study began, little was known about the quality of data used in rate filings to insurance departments. However, the general assumption was that carriers submitted rate filings each year in most states, and that these filings included data on MLRs. The presumption was also that, for prior approval states,14 the filings would include information as to whether the state approved the rate increase.
In reality, we found a lack of publicly available data and often inconsistent, inadequate quality of data from rate filings prior to the Affordable Care Act. Since the passage of the Affordable Care Act, we have found improvements in publicly available data in terms of both the availability and quality of rate summaries of filings. These improvements should increase the transparency of health insurance markets, thereby facilitating price competition and efficiency. Table 13 on page 43 includes data on measures that states have implemented following passage of the Affordable Care Act relating to the transparency of premium increase filings.
13 U.S. Government Accountability Office, Private Health Insurance: State Oversight of Premium Rates, July 2011, GA-11-701.
14 States in which the regulator must give approval before a proposed rate change can take effect are referred to as “prior approval” states; they are contrasted with file and use states, some of which may utilize retrospective review. Some states require prior approval only from HMOs, or only from large carriers like BCBS. See Table 1 for more details.