The oversight of individual, self-employed and small employer medical insurance happens at the state level. Since every state has its own unique set of regulations aimed at maintaining low cost medical insurance, the laws governing health insurance contracts vary dramatically. Some states have the authority to regulate premiums charged by health insurance companies, while others simply review rates but do not have the authority to reject a premium increase. The laws also differ based on the type of medical insurance policy offered in Michigan and how the health insurance company filed their contract in the state. Some health insurance policies are filed directly with Michigan, while others are considered “out-of-state” trust or group association arrangements. The former are generally subject to greater regulation thereby giving Michigan more control and authority over what benefits must be provided and the premiums that can be charged.
In Michigan, rates for health insurance policies must generally be filed with the insurance commissioner but can be used immediately without formal “approval.” This type of limited oversight often relies on consumer complaints to indicate a problem, so individuals are not always protected against large medical insurance premium increases.
New medical insurance rate review requirements
Since medical insurance premiums have doubled during the past 10 years, the new healthcare law provides for special rate review provisions to help consumers get “better value for their health care dollars.” The Patient Protection and Affordable Care Act require the U.S. Department of Health & Human Services (HHS) to work in collaboration with state insurance commissioners to review “unreasonable increases in medical insurance premiums.”
The new healthcare law also requires medical insurance companies and health plans that propose an “unreasonable” rate increase to provide justification for the increase to HHS, and post the justification on their websites. Additionally, in order to promote price transparency, HHS asked the National Association of Insurance Commissioners (NAIC) to develop a standard rate filing disclosure form that all health plans must use when justifying unreasonable rate increases to HHS and Michigan. The goal is to ensure that regulators and the public can access the data and justifications in a way that allows for “apples-to-apples” comparisons. “Grandfathered” health insurance policies effective prior to March 2010 (before the new healthcare law was enacted) are exempt from this new rate review requirement.
State grants to support review of medical insurance premiums and rate increases
Lastly, PPACA provides a pool of $250 million in grant funding for state insurance departments to support an enhanced review of medical insurance rates and premium increases. It should be noted that PPACA does not alter Michigan’s existing regulatory authority over health insurance rates and premium increases.