WASHINGTON – In a letter to Health and Human Services (HHS) Secretary Kathleen Sebelius today, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of Senate Finance Committee, questioned the Obama Administration’s decision to waive the health insurance rate requirements that were included in the Patient Protection and Affordable Care Act (PPACA) for only one state, Massachusetts.
“State regulators throughout the country have expressed to you their concerns about the impact of rating reforms on the operations of their markets and have requested a similar transition as the one given to Massachusetts,” wrote Hatch.
Insurance rate requirements restrict how much health plans can vary premiums based on factors such as age, health status and gender. While a variety of states allow insurers to consider multiple factors before setting rates for individuals and businesses, starting in 2014 the new health law imposes modified community rating rules that prohibit health plans from rating based on an individual’s health status. The new rules only allow for limited rating based on age, geographic area, number of family members, and tobacco use.
In response to comments from all state insurance commissioners requesting a phased-in approach to federal rate requirement mandates, which could trigger rate shock and cause premium costs to rise for consumers, the Administration claimed they did not have the authority to establish a transition period. However, Massachusetts has been granted a three-year transition period to eliminate the use of certain rating factors allowed under state law.
Hatch continued, “It seems only reasonable that the Department has the same authority to offer flexibility to all states, regardless of whether or not the states had an established exchange prior to January 1, 2010.”
Hatch asked HHS to provide information on: the legal authority to grant a transition period for rating requirements; whether similar transition periods will be provided to other states; and why the final rule implementing the rate requirements states the department did not have the legal authority to provide a phase-in of the rating provisions for states.