How states can lower insurers' premiums

Policy experts and lawmakers say that state officials can take certain steps to help drive insurers to lower their premium rates, including reviewing proposed rates and expanding Medicaid, reported Governing.

Regardless of whether states implement steps to help reduce premiums, it's still hard to associate low premiums directly with any particular actions. "You can't point to one variable and say, 'That's why the rates are going up and down,'" Caroline Pearson, vice president of Avalere Health, told Governing. Market competition, including new consumer oriented and operated plans, can be especially impactful on insurance prices, she added.

In addition to how states are limiting insurers from selling catastrophic plans and locking out insurers if they don't follow certain regulations, there are a few other ways states could help decrease premiums, according to Governing.

First, granting state officials with the authority to review rates could lower premiums. Currently, 15 states allow for a "file-and-use" method that gives officials minimal authority to change premiums, and 35 states use "prior approval" methods that offer officials some authority to reject unjustified rates. The problem, however, is determining rate review authority actually leads to lower costs, the article notes.

Second, some industry experts believe that when states expand Medicaid, they will see a corresponding decrease in, or at least moderating of, premium rates. The RAND Corporation, for example, predicted that premiums will rise by as much 10 percent in states not expanding Medicaid because low-income consumers would obtain coverage through private plans selling on health insurance exchanges. But consultant Caroline Pearson disagrees, telling Governing that the difference between low-income consumers in Medicaid or private plans won't likely impact premium costs.

To learn more:
- read the Governing article