Ga. insurance rate hikes facing new rules

Sharp premium increases by Georgia health insurers will be subject to new transparency, and more public scrutiny, under changes ordered by state Insurance Commissioner Ralph Hudgens.

In making the changes, the state is following provisions in the federal health reform law. The Affordable Care Act, as the law is officially known, requires reviews of insurers’ proposed rate hikes at or above 10 percent for individual and small-group policies, to determine whether they are justified.

Starting Sept. 1, insurers proposing increases of 10 percent or more in Georgia will have to provide additional documentation to state regulators. Consumers will be given more information on those rate hikes and allowed more input into the process.

Georgia will also seek federal funds available for beefing up its rate-review staffing levels, a state official said Thursday.

And if a double-digit rate increase eventually goes into effect, information on that hike will be publicly accessible on the Georgia insurance department’s website, said Ron Jackson, assistant commissioner.

The U.S. Department of Health and Human Services recently said such state rate reviews led to reductions of proposed premium increases in Rhode Island, California and North Dakota.

A consumer group in Georgia said it welcomed the changes. “Consumers have seen health insurance premiums increase year after year at a much faster clip than their incomes and overall inflation have increased,’’ said Cindy Zeldin of Georgians for a Healthy Future. “We hope that Georgia will utilize these tools on behalf of consumer to the fullest extent possible to spur insurers to operate more transparently and more fairly in the market.”

HHS recently declared that 10 states did not have adequate regulatory power over premiums sold to individuals or small firms. The federal government will review rates in those states, which include Alabama and Louisiana in the Southeast.

Georgia originally was told in a June letter that it did not meet the ‘’effective rate review criteria.’’ But the state insurance department responded that it would ‘’conduct an effective and timely review of rate filings by all health insurers.’’ And it pledged more transparency for consumers.

In a July 13 directive to health insurers, Hudgens required them to submit more documentation on proposed hikes of 10 percent or more. And he said that ‘’we will also be expanding consumer information about proposed, pending health insurance rate increase filings and allowing for consumer input on those filings.’’

Double-digit rate increases have been common in Georgia and other states. In fact, a hike of up to 39 percent by Anthem Blue Cross in California gave momentum toward the passage of the Affordable Care Act in 2010.

Jackson said past rate increases in Georgia have been ‘’all over the board.’’

“The commissioner and I understand that no one likes a rate increase,’’ Jackson said. But medical costs and claims history sometimes require a large premium hike, he said.

Hudgens remains opposed to the reform act, but ‘’he also recognizes that it’s the law,’’ Jackson said.

He added that he didn’t know whether the new requirements would lead to fewer double-digit rate increases in Georgia, nor whether there would be greater regulatory scrutiny of them.

“It’s not like we’ve been letting these things go’’ under the current system, Jackson said. “I think our folks have done a good job at reviewing them.’’

A Georgia insurance industry group said Thursday that it did not agree with the 10 percent threshold, but it expressed relief that state regulators — and not the federal government — will run the review process in Georgia.

“If the feds would come in and take over, that would have been the worst-case scenario,’’ said Graham Thompson, executive director of the Georgia Association of Health Plans, which represents the state’s major insurers.

HHS ‘’picked 10 percent out of the air,’’ Thompson said, adding that medical cost inflation alone is running at 8 percent.

In many states, a commissioner has the power to approve or reject insurance rates before they take effect. But under the system currently in place in Georgia, insurers generally can implement a higher rate and the insurance department then reviews it.

Jackson said that the state has filed a letter of intent to apply for the next round of federal funding for rate-review staffing. Georgia, under former insurance Commissioner John Oxendine, did not apply for the first round of that money.

The Affordable Care Act made $250 million available to states to review rate hikes. To date, 43 states and the District of Columbia are using $44 million in grants to help them improve their oversight of proposed rate increases, HHS said.

The insurance changes required by Hudgens do not affect health plans run by large, self-insured employers, which are not subject to state insurance regulations.