Make the pricing of health insurance more transparent

By David ButlerConsumer Reports

One of the top complaints we get from consumers is about the rising cost of health care. These complaints are understandable—health insurance premiums have continued to grow faster than consumer incomes. And with insurers starting to set their rates for next year’s plans, there’s an even greater focus on insurance premiums.

Rising premium rates have long been a concern. Before the Affordable Care Act—sometimes referred to by both sides in the health insurance debate with varying motives as "Obamacare"—there were limited safeguards in place to prevent skyrocketing premium increases that made insurance unaffordable for millions of Americans.

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To help get a better handle on costs and prevent insurers from dramatically raising prices without reason, the ACA includes provisions to strengthen states’ oversight of premium rates and gives the Department of Health and Human Services the authority to review premium rate increases that are potentially “unreasonable.” A key part of this was increasing transparency and requiring that the rates insurers propose be made public before they go into effect, giving states and consumers the opportunity to weigh in and make sure they are justified.

Unfortunately, there has been a significant lag in making this information available. HHS has only recently posted the filing for 2013 plans—the ones for which consumers are already paying. And though some states also require full disclosure of rate filings, the level of required transparency varies drastically.

Moreover, insurance companies routinely claim that a substantial amount of information in their rate filings is a trade secret or confidential. As a result, in many states, the insurer's justification for its proposed rates is unavailable.

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If we don’t know what prices insurers are proposing and why, it’s hard to push back and protect consumers from outrageous increases. That’s why Consumers Union, the policy and advocacy arm of Consumer Reports, is urging the Department of Health and Human Services to follow through on releasing next year’s filings before they become final.

We recently sent a letter, signed by 70 groups from across the country asking regulators to quickly disclose complete filings, including all the underlying data to justify these rates, including estimates, projections, assumptions, and projections insurers use to calculate a rate. That way insurers are held accountable and can’t hide indefensible rates under the guise of trade secrets.

Consumers, not insurers, stand to lose more without a transparent marketplace. With open enrollment less than five months away, we’re asking the new Secretary of Health and Human Services to make this a priority. We believe that consumers have a right to know why insurers are upping their premiums. Take our action and join the thousands of consumers asking HHS to release the rates before it’s too late.

This feature is part of a regular series by Consumers Union, the policy and advocacy arm of Consumer Reports. The nonprofit organization advocates for product safety, financial reform, safer food, health reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.

Read other installments of our Policy & Action feature.

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