U.S. Department of Health and Human Services: Rate Review Annual Report September 2013. Rate Justification Program

09/01/2013

The Affordable Care Act authorizes HHS to focus special attention on rate increase requests that are potentially “unreasonable.”  By regulation, HHS has defined requested rate increases of 10 percent or more as the threshold triggering greater scrutiny.8 Insurance companies requesting such an increase must submit, both to HHS and their state regulator, a justification for such request.  Reviewing data collected from the Rate Justification Program, HHS found that in both the individual and small group markets, approximately 28 percent of all rate increase requests of 10 percent or more were modified or rejected (see Appendix tables A-1 and A-2).

  • Individual Market

    • Approximately 28 percent of all 2012 individual market rate increase requests of 10 percent or more were modified by the issuer or rejected by the state (where the state had such authority).

      Figure 3

      Determinations of Requested RateIncreases of 10% or More Individual Market

      Source: Rate Review Justification data are submitted to the Center for Consumer Information and Insurance Oversight (CCIIO) for rate requests of 10 percent or more. This analysis used only adjudicated requests with effective dates between January 1, 2012 and December 31, 2012.

      This trend in the individual market corroborates findings from a February 2013 ASPE issue brief based on data from 15 states.  That brief showed that the proportion of rate filings for the individual market in which the requested increase was 10 percent or more declined from 75 percent in 2010 and 50 percent in 2011 to 34 percent in 2012.  The average rate increases requested and implemented were 9.4 percent and 8.1 percent, respectively.  Taken together, the findings from the February 2013 ASPE issue brief and this paper suggest that the rate review provisions of the Affordable Care Act result in fewer requests for large rate increases overall and in modifications or withdrawals of some proposed rate increases.9

  • Small Group Market

    • Approximately 28 percent of 2012 small group market rate increase requests of 10 percent or more were modified by the issuer or rejected by the state.

      Figure 4

      Determinations of Requeted Rate Increases of 10% or More Small Group Market

      Source: Rate Review Justification data are submitted to CCIIO for rate requests of 10 percent or more. This analysis used only adjudicated requests with effective dates between January 1, 2012 and December 31, 2012.

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