Improving Value

Insurance Rate Review

Rate review is the process by which insurance regulators review health carriers' proposed insurance premiums to ensure they are based on accurate, verifiable data and realistic projections of healthcare costs and utilization.

Rate review has historically been handled by the states using a wide variety of approaches. The ACA sought to place a floor underneath the level of rate review, including a requirement that the Department of Health and Human Services (HHS), along with the states, establish a process for annual review of rates above a certain threshold to see if they are “unreasonable,” or unjustified, before these plans are sold to consumers. Currently, federal regulations require such a review whenever a carrier proposes an annual premium rate increase in excess of 10% but states have the autonomy to adopt lower thresholds. Further, HHS is tasked with reviewing proposed rates for states that fail to qualify as having an “effective rate review” program.

Health insurance rates are something consumers care deeply about even if they don’t know what “rate review” means. Using a rigorous, multidimensional review process which includes input from the public and consumer advocates has been shown to reduce rates for consumers. But state approaches to rate review are very uneven. Most states need to:

  • Change the Threshold for Review to Include more Filings

  • Provide Better Public Access to Rate Review Information

  • Couple Rate Review with Prior Approval Authority or Active Purchaser Exchange

  • Expand the range of factors that can be considered during rate review

More information about insurance rate review can be found on the CMS website.