Hikes in health insurance premiums fall; administration credits healthcare law

The number of double-digit hikes to health insurance premiums has fallen dramatically because of President Obama’s healthcare law, the Health and Human Services Department said Friday.

The average increase in health insurance premiums has fallen significantly since the healthcare law — and its provisions allowing the health department to review certain rates — took effect in 2010. The agency said rate review has contributed to those declines.

The average premium increase in 2012 was 30 percent lower than in 2010, according to a report released Friday. 

{mosads}Of the rate increases insurance plans filed last year, 34 percent sought to raise premiums by 10 percent or more, the department said — down from 75 percent in 2010.

The rate increases that insurers ultimately implemented was usually lower than their initial request. Actual premium increases were, on average, about 3 percent lower for plans that sought an increase of more than 10 percent, and 1.4 percent lower among all plans.

The report says the drop in double-digit premium hikes is “consistent with the increased scrutiny that such requests now receive,” although it also acknowledges the overall decline in healthcare costs nationwide. 

In response to the HHS report, the insurance industry noted the overall decline in healthcare costs and said savings have also stemmed from efforts to make the healthcare system more efficient.

“Health insurance premiums are not set arbitrarily,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans. “They are developed using established actuarial principles that take into account a variety of factors, including increases in medical costs, changes in the covered population, and new benefit mandates and regulations.”

The healthcare law doesn’t give the federal government the power to block proposed rate increases. But insurers must justify any increase of more than 10 percent, and it can use public pressure to push insurers toward a smaller hike.

Most states have their own rate-review programs, several of which allow state regulators to reject premium increases they deem excessive. The healthcare law provided $250 million in grants to help states beef up their rate reviews, and the Health and Human Services Department said 40 states reported some level of “enhancements” to their programs.

— This post was updated at 12:47 p.m.