The Obama administration is sending $1-million grants to state insurance regulators to help increase oversight of rising health insurance premiums, a key step in implementing the new healthcare law.
The grants announced Monday, which went to all but five states, will enable many to expand public access to information about rate hikes and to hire experts to review what insurers want to charge.
More than a dozen states also plan to seek additional authority to block insurance premium increases they deem unjustified, according to the U.S. Department of Health and Human Services.
Fewer than half of state insurance commissioners have comprehensive “prior approval” authority, which gives them the power to review insurance company records and stop proposed rate increases in the individual and small-group markets.
Some states do not even require insurers to publicly report proposed rate hikes.
The Obama administration and many consumer advocates had hoped that the new healthcare law would give all states full rate review authority. But, blocked from including such a provision in the final legislation, the administration has urged state leaders to push forward on their own.
Commissioners in several states with a history of minimal oversight such as Alabama, Illinois, Louisiana and Montana are doing just that.
And many states that already have prior approval authority — including Florida and Maryland — are taking steps to strengthen their oversight.
The District of Columbia also will receive a grant.
Secretary of Health and Human Services Kathleen Sebelius said the grants would “restore some basic fairness to the health insurance market.”
But expanding government power remains controversial in many states. And the insurance industry, which opposes prior approval authority for regulators, has been a powerful force in many state capitols.
Arizona, Connecticut, Missouri, Ohio, Pennsylvania, South Carolina and Virginiahave no comprehensive authority to block rate hikes and do not plan to seek legislation to bolster their oversight powers, according to the Health and Human Services Department.
Alaska, Georgia, Iowa, Minnesota and Wyoming did not did not receive grants because they did not seek them.
In California, Gov. Arnold Schwarzenegger’s administration specifically ruled out seeking prior approval authority.
Consumer Watchdog, a Santa Monica-based advocacy group, urged the administration to reject California’s grant application, saying the grant would “prevent, not develop, any effective state regulation of health insurance rates.”
California nonetheless received its grant, which is to be used to streamline collection of data on proposed rate hikes.
Sebelius, herself the former insurance commissioner of Kansas, said Monday that the administration would continue to work with states to enhance their oversight even if they did not apply for grants.
But she cautioned that the federal government would step in if insurance companies try to pass along “unreasonable” rate hikes to consumers. The administration is still developing regulations dictating how this would be done.