Study: States with rate review authority have lower premiums

When state regulators are authorized to review insurers' proposed rate increases, premiums are lower, according to a new study published in the journal Health Affairs

In the first study to examine the impact of state review authority on premiums, the study authors gathered data about how states changed their rate review authority between 2010 and 2013 and combined that information with insurers' rate filings.

The result was that adjusted premiums in states with prior approval and medical-loss ratio requirements were lower between 2010 and 2013 than premiums in states with no authority to block rate increases.

For example, in prior-approval states, premiums declined from $3,526 in 2010 to $3,452 in 2013, while premiums increased from $3,422 to $3,683 in states with no rate review authority.

Indeed, policy experts and lawmakers have said that state officials can help drive insurers to lower their premium rates, including reviewing proposed rates and expanding Medicaid, FierceHealthPayer previously reported.

The study also found that several states made changes to their rate review and medical-loss ratios between 2010 and 2013. Although only two states had prior approval and an 80 percent medical-loss ratio in 2010, eight states implemented those requirements by 2013. The District of Columbia and Massachusetts, for example, shifted from prior approval without a medical-loss ratio to prior approval with ratios of up to 79 percent and 80 percent, respectively.

Meanwhile, Alaska and Mississippi upgraded to requiring prior approval without a medical-loss ratio requirement, while South Dakota changed from limited prior approval with a 61 to 79 percent medical-loss ratio to prior approval and an 80 percent ratio, the study found.

To learn more:
- here's the Health Affairs study (subscription required)