On March 31, Health Affairs released a brief examining the aspects of the national health care reform law governing the review of “unreasonable” premium rate increases.  The law requires states to develop systems to determine whether rate increases are unreasonable or allow the U.S. Department of Health and Human Services (HHS) review rates for them.  In addition, under the measure, insurers must publicly justify rate increases of 10 percent or more.  Health reform provides $250 million for states to take action against insurers that seek unreasonable premium rate increases, including $46 million that HHS already allocated.  The brief explains how the provisions operate and highlights concerns among consumers and the health insurance industry, including: a lack of adequate time to determine whether states’ review regimes are effective, a lack of authority to prevent implementation of unreasonable rates, and a desire to add additional mechanisms to prompt review.  The authors conclude that it will take several years to determine whether rate review has any effect on premiums.

From the report: 

The Affordable Care Act of 2010 requires the federal government to work with the states to develop a process for reviewing "unreasonable" increases in premiums for certain categories of health insurance. The Department of Health and Human Services (HHS) recently issued a proposed rule defining the meaning of "unreasonable" and describing how states and the federal government would review insurance company proposals to increase premiums. The goal is to discourage insurers from inappropriately raising premiums and to make the health insurance market more consumer-friendly and transparent.

This brief describes what is in the law and the proposed federal regulation, and summarizes criticisms coming from insurers on the one hand and consumer groups on the other.

Full Report: "Unreasonable" Insurance Rate Increases

Health Affairs. (2011). "Unreasonable" insurance rate increases.