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New law expands Insurance Department authority to review health insurance rates

Small group plan health insurance rate increases of more than 10% must be filed and approved by the Pennsylvania Insurance Department under a new law signed by Governor Corbett in late December, 2011.  The expanded authority under Act 134 to review small group health plan rates in Pennsylvania comes in response to provisions in the Patient Protection and Affordable Care Act (PPACA) that give the federal government the authority to disapprove such increases unless they are reviewed at the state level.

In Pennsylvania, health insurance rate reviews were largely deregulated in 1996 and the Insurance Department maintained only the authority to review rate increases for “Blues” plans, HMO’s and individual plans.  However, under the PPACA, state governments without authority to review increases of more than 10% for plans insuring 50 or fewer individuals would cede the authority to do so to the U.S. Department of Health and Human Services (HHS).  Lacking such authority in Pennsylvania, HHS had already begun interceding by disapproving several proposed increases.  Under the new law, authority to regulate health insurance rates is again restored to the Commonwealth, which can disapprove them if they are deemed “excessive, inadequate or unfairly discriminatory.”

Pennsylvania Insurance Commissioner Michael Consedine praised the legislature for restoring part of his office’s authority in response to the PPACA, noting the “need for states to maintain control over their marketplaces in a time of uncertainty in the regulation of health insurance as opposed to ceding it to the federal government.”

While Act 134 does restore authority to review certain increases in small group rates, “large” group plans covering more than 50 lives remain outside of the rate review authority at either the state or federal level.

The full text of Act 134 can be accessed here:

Act 134 in PDF Format via State.Pa.Us

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