HHS awards $100M in rate review grants, mostly to states that can block hikes

{mosads}Steve Larsen, the director of the HHS office that oversees implementation of the healthcare reform law, acknowledged that the department wants to encourage sates to seek the power to block rate hikes from taking effect. But he also noted that states with the power to reject rate hikes face a heavier workload than those without it. That’s why prior-approval states got bigger grants than their counterparts, he said.

The baseline grant to each state was $3 million. States with prior approval got an extra $600,000.

Along with the grant announcement, HHS released a report Tuesday highlighting states’ experiences with rate review. New authority that stemmed from the rate review grants helped North Carolina regulators return roughly $14 million to consumers last year, according to the report. Several other sates blocked or deeply reduced proposed increases.

“In the past, insurance companies often jacked up people’s rates without rhyme or reason,” HHS Secretary Kathleen Sebelius said.

The insurance industry says that rate review puts too much emphasis on premiums and ignores the underlying reason that premiums go up — increasing healthcare costs. America’s Health Insurance Plans said earlier this month that rate review will “literally do nothing to address the soaring cost of medical care.”

According to AHIP’s analysis of government data, premium increases rose directly in proportion to increases in healthcare costs from 2000 to 2009.

“Capping premium increases without looking at the underlying components is similar to capping the prices auto makers can charge consumers, while allowing the steel, rubber, and technology manufacturers to charge the auto makers whatever they want,” AHIP said earlier this year.