NAIC gives states tips to mitigate premium hikes

Fed up with increasing premium rates that insurers keep proposing, some state regulators have turned to the National Association of Insurance Commissioners to help find ways to protect consumers against these rate hikes, reported The New York Times.

The issue of whether premiums will rise as a result of the reform law has been widely debated recently, with federal officials trying to reassure states and consumers that prices won't increase next year. But studies are reaching the opposite conclusion; a California agency found that individual premiums will likely rise an average of 30 percent, FierceHealthPayer previously reported.

NAIC wrote a paper outlining steps states can take to mitigate premium increases, which are largely expected to continue rising as various reform provisions are implemented.

For example, states can tighten their regulation of premiums by imposing a limit on rate changes or forcing insurers to either cut costs or operate at a loss. They also could provide financial assistance to consumers to help them afford rising insurance costs or they could encourage a wide range of consumers, including young and healthy people, to buy insurance coverage to help insurers share the costs of the sickest patients, a method that could lower insurers' overall costs.

But NAIC warned that if a state is too restrictive, insurers may opt out of the market. Plus, premium caps could delay justifiable rate increases and "result in higher future rate increases or threaten insurer solvency."

Kansas Insurance Commissioner Sandy Praeger, a former NAIC chairwoman, explained that the paper isn't meant as a simple panacea to rising premiums. "Every state has a different political climate and somewhat different market conditions," she told the Times.

To learn more:
- read the New York Times article

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