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by Susan Jaffe, AARP Bulletin, September 27, 2010
Q. I thought health care reform would end ridiculous insurance price hikes, but my premium for an individual health insurance policy is going up 22 percent. Can they do that?
A. Yes, your insurer can raise premiums, and probably will as health care costs rise. The new health care law includes regulations to restrain premium hikes and protect consumers, but most of the regulations won't take effect until 2014. Meanwhile your options are to choose less expensive coverage or file a complaint with your state insurance department, depending on where you live.
Right now, about half of the states and the District of Columbia already have the power to trim or even eliminate an increase that is not justified. So far this year, hefty rate hikes were cut nearly in half in Massachusetts, rejected in Oregon and lowered in California. However, depending on where you live, premiums for individual and small group policies this year are rising as much as 25 percent.
Insurers have blamed premium increases on the cost of providing new benefits required under the new law. Federal officials counter with industry, academic and government studies showing that the changes, which take effect four years from now, are expected to raise premiums by only about 1 to 2 percent.
And new price safeguards are already in place.
The new law provides states with $250 million in "health insurance review grants" to beef up efforts to review premium increases. The first of these grants was awarded in August to 46 states. Consumers can find out how their state reviews premiums and how it will spend the grant money to improve this process by checking a new government website.
Later this year, the U.S. Department of Health and Human Services will be issuing rules requiring state or federal review of "unreasonable" premium increases. Insurers will have to justify these hikes, and this information will be posted publicly for consumers and employers.
Although health care reform doesn't limit premium increases by a certain amount, several provisions will make it more difficult for companies to raise premiums. For example:
And starting in 2014:
Next year, average Medicare Advantage premiums will go down slightly, by 1 percent, according to the Centers for Medicare & Medicaid Services.
Susan Jaffe of Washington, D.C., covers health and aging issues and writes the Bulletin’s weekly column, Health Care Reform Explained: Your Questions Answered.
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