States go beyond reform mandates to keep premiums low

A new report shows states go beyond the healthcare reform law to protect consumers from premium increases and so-called "rate shock," including limiting insurers from selling catastrophic plans and locking out insurers if they don't follow certain regulations.

Researchers from the Urban Institute and the Georgetown University Health Policy Institute found 11 states--Alabama, Colorado, Illinois, Maryland, Michigan, Minnesota, New Mexico, New York, Oregon, Rhode Island and Virginia--are taking different approaches to protecting consumers, though no one strategy was being used by all 11 states.  

"Our findings indicate that study states had mixed approaches to mitigating rate shock and adverse selection, with some taking steps beyond the required federal measures but with other policy options left unexplored," the researchers wrote. "The presence and importance of rate shock and adverse selection will be measurable as enrollment in the exchange and non-exchange individual markets takes shape for 2014 and beyond."

States' strategies to prevent insurers from increasing premiums too high include:

  • Maryland and Oregon use state funds to establish reinsurance programs to better control premium costs.
  • Colorado, Minnesota and Alabama transition people with pre-existing conditions out of high-risk pools into plans with younger, healthier people.
  • Maryland, New York and Oregon lock out insurers from participating in their health insurance exchanges if they don't participate in the first year as well as limit the sale of catastrophic plans.

The researchers added that "minimizing the impact of adverse selection--both against the overall insurance market and the exchanges--will require strong monitoring and oversight." In fact, the U.S. Department of Health & Human Services said states' enhanced oversight and scrutiny of insurer rate hikes saved consumers $1.2 billion on premiums last year, FierceHealthPayer previously reported.

To learn more:
- here's the report (.pdf)

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