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Member Research & Reports

Member Research & Reports

Minnesota and Berkeley Study Shows State-level Prior Approval Authority over Individual Market Health Insurance Rates Lowers Rate of Premiums’ Increase

A recent study involving researchers at the University of Minnesota School of Public Health and University of California, Berkeley School of Public Health found that state-level prior approval authority over individual market health insurance rates that were in effect from 2010 to 2013 was associated with a 10-percentage point lower rate of increase in premiums.

[Photo: Dr. Pinar Karaca-Mandic]

“This study provides the first evaluation of state rate review authority in the individual market in the years immediately following the implementation of the Affordable Care Act,” said Dr. Pinar Karaca-Mandic, lead author and associate professor at the University of Minnesota School of Public Health. “We found significant variations in rate review authority across states and these were highly associated with differences in adjusted premiums.”

The study was published in Health Affairs.

The Affordable Care Act (ACA) requires carriers in certain categories of health insurance to provide public justification for rate increases of 10 percent or more. During the 2010–13 time period, 44 states upgraded their health insurance rate review programs by hiring or contracting actuary services, upgraded information systems, and enhanced insurance rate transparency.

Study authors collected rate review authority and anticipated loss ratio requirements from each state and the District of Columbia by examining statutes, regulations, and bulletins and distributed a questionnaire to each state and the District of Columbia. Premiums were adjusted for insurance carrier, insurance market, provider market, political, and population differences across states.

During the 2010­–13 time period, the study also found:

The authors say given the expansions in individual-market coverage, it will be important to further evaluate state rate review authority and activity to determine whether study findings remain in effect over a longer time period and are generalizable throughout the expanded individual insurance market.