'Unreasonable' Insurance Rate Increases

The Affordable Care Act requires states and the federal government to review premium increases that appear excessive.

The Affordable Care Act (ACA) 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 ACA provides $250 million in grants to states to develop or strengthen their rate review systems. The law also requires additional rate review activity by HHS and the states, such as monitoring premium increases for plans within and outside the exchanges. However, how effective the measure will be in actually restraining premium growth remains to be seen. Notwithstanding increased federal oversight of insurance put in place by the ACA, insurance company activities are generally regulated at the state level. Some states lack the authority to block rate increases from going into effect, even if regulators should determine that those increases are not justified.

This Health Policy Brief examines how the ACA attempts to identify and regulate “unreasonable” insurance rate increases, and was published online on March 31, 2011 in Health Affairs.