The News Journal

By JONATHAN STARKEY • The News Journal • August 4, 2011

Delawareans may soon have more say about the increasing costs of health insurance sold in the private market to individuals and small businesses.

In coming weeks, rate increase requests from health insurance companies for such plans filed with the Delaware Department of Insurance will be posted online. Justifications for those increases will also be released publicly and consumers will be offered a chance to comment. --- If increase requests reach a certain threshold -- likely 15 percent, officials said -- public hearings will be scheduled, according to the insurance department.

That's a major shift for Delaware's insurance department, which until 2009 had no authority to even approve or deny rate increases. States still have no authority over the rates for policies most large businesses offer employees -- so-called self-insurance, or ERISA plans, which are governed by separate federal law.

After gaining review authority over individual and small group plans, Delaware regulators protected rate increase requests from public view. Consumers here only find out that their health insurance costs are going up when they get the bill. That policy appears set to expire.

The coming changes to add transparency to the rate review process are driven by a provision in last year's federal health reform law designed to put more public pressure on health insurance prices sold in the private market, in part to set the stage for the state insurance exchanges to debut in 2014.

Last month, the U.S. Department of Health and Human Services, which is tasked with implementing the law, labeled Delaware's rate review process "effective," meaning local regulators will continue to review rates without federal intervention. But those reviews must follow a set of common rules. -

Insurers must publicly provide justification for rate increases, for example, and regulators must explain their decisions in documents that will also be posted publicly.

The reviews, which begin Sept. 1 in all 50 states, will apply only to rate increases that exceed 10 percent. In Delaware, however, regulators are promising to accept public comment on every proposed rate increase, no matter its size. A weeklong comment period is planned.

Public hearings are also not required under the federal law but are planned here, said Deputy Insurance Commissioner Gene Reed.

"Transparency and speed to market is critically important to the commissioner," Reed said.

Reed said posting the rates publicly "allows the consumer to see the rates before they are reviewed and finalized. This also allows the commissioner to review the public comment along with the actuarial review prior to determining if the rate should be increased."

Rate review provisions in last year's federal health reform law were among a suite of changes designed to put downward pressure on rising health insurance costs.

Overall -- including ERISA plans -- the price of a family policy that Delawareans get through their employer surged from $7,714 in 2001 to $14,671 last year, according to HHS data. Employees and their families now pay more than $4,200 a year for premiums -- and that doesn't account for higher co-pays and deductibles.

Gary Claxton, a vice president at the Kaiser Family Foundation, a health policy firm, said the more public rate reviews are likely to have some impact.

"If they have to pay attention and people are watching how they pay attention, that will probably affect what insurers ask for and will also make the [insurance] departments a little more attentive," Claxton said. "We've seen more states take action since this passed than we had in a long time."

There may be some evidence that's already happening in Delaware. Earlier this year, the insurance department began posting online approved rate increases -- plus the amount that insurance companies had originally requested. Supporting information still was not available, however.

Several rate increase requests above 10 percent have been knocked down below 10 percent by regulators, according to the site. That includes a request by UnitedHealthcare's Golden Rule Insurance Co. to raise rates in the individual market by 10.4 percent. That was knocked down modestly to 9.9 percent, but saved about 1,400 customers more than $13,000 on aggregate.

"Sometimes just having public noise helps," said Cheryl Fish-Parcham, deputy director of health policy at Families USA, a health care consumer advocacy group.

Jo Ann Fields, a family doctor in Felton who has advocated for a more consumer-friendly rate review system, saw her rates go up by 13 percent last year and another 6 percent this year. But she's had little luck after pressing the department for details about the increases.

She was heartened by news that the review system would receive a dose of transparency, but said consumers could also use help understanding complicated financial documents that insurers file when looking to raise rates.

In certain states, including Maine, regulators have hired consumer advocacy groups to help examine the filings. That would help here, Fields said.

"It's a one thing to say consumers can sit in the room," Fields said. "It's another to help us participate effectively."