The Center for Consumer Information & Insurance Oversight

2012 Progress Report: Health Reform is Opening the Insurance Market and Protecting Consumers

The President's health law gives hard working, middle-class families the security they deserve.  The Affordable Care Act protects consumers from the worst practices of insurance companies.  The law also takes steps to reduce costs and create a transparent health insurance market where consumers can purchase the quality, affordable health insurance coverage that is right for them and their families.

The Affordable Care Act includes several policies to slow the growth of health care costs.  By fighting fraud, better coordinating care, preventing disease and illness before they happen, and creating new state-based insurance marketplaces, the Affordable Care Act is reducing health care cost growth for all Americans.

The law is also creating a more transparent, consumer-friendly insurance market.  Later this year, consumers will begin receiving a four-page, easy-to-understand summary of what their coverage provides so they can compare their coverage options and better understand the value of the coverage they purchase.  And in 2014, insurance companies will be prohibited from charging people higher rates for pre-existing conditions or because of their gender or denying them coverage altogether.

Before the Affordable Care Act, consumers received little or no information about proposed premium increases, and were not told why health insurance companies want to raise rates.

The Affordable Care Act’s Rate Review policies bring an unprecedented level of scrutiny and transparency to health insurance rate increases.  They ensure that, in every state, every proposed increase of 10% or more is evaluated by independent experts to assess whether they are based on reasonable assumptions and sound data.

Rate review is expected to help moderate premium increases and provide consumers with greater value for their premium dollar. Additionally, health insurance companies must provide easy to understand information to their customers about their reasons for significant rate increases, as well as publicly justify and post on their website any unreasonable rate increases. These protections allow consumers in every state to learn more about their insurance premiums.  All of this information is available at

States with effective rate review systems conduct reviews of proposed rates above the applicable threshold, but if a state lacks the resources or authority to conduct the required rate reviews, HHS conducts them.

HHS encourages states to conduct rate review and has worked with states to strengthen their programs. The Affordable Care Act provided states with $250 million to strengthen their own rate review programs.  Available through federal Fiscal Year 2014, these grants are helping states improve their review of proposed health insurance premium increases and hold insurance companies accountable for unreasonable premium increases.

The Affordable Care Act’s Rate Review program started for most individual and small group plans on September 1, 2011.  The mere existence of this program has changed health insurer behavior. The Department of Health and Human Services has collected data from health insurers and states that indicate that rate review is helping to moderate rate increases and hold insurance companies accountable.

This report summarizes the results of states’ efforts to build effective rate review programs and, in some cases, to deny or negotiate down proposed rate increases.  Over the past 6 months alone, states and HHS have worked to protect over 1.3 million consumers from unjustified rate increases.  The report explains how the combination of transparency and scrutiny on premium increases benefits all Americans with private health insurance by affecting health insurer behavior, through, for example, the grants that have expanded the reach of state rate review programs.

Fewer Double-Digit Increases

Many states have reported that the number of insurance companies requesting rate increases over 10% has declined significantly over the last 9 months.

  • Texas reports that since September 2011, when the rate review program first began, "the number of issuers proposing rate increases that exceed 10% has declined."
  • Kentucky reports that since August 1, 2011, it has seen a dramatic decrease in the number of rate filings that include a rate increase of 10% or more.
  • Nevada has reported that Individual and small group carriers have responded to the new Affordable Care Act protections by reducing rate increase requests to not exceed double digits.
  • During the last quarter of 2011, Indiana denied 15 rate increase requests, and the state also notes that rate increase requests appear to be lower than last quarter.

States Are Actively Reducing Rate Increases

With encouragement and financing from the Affordable Care Act, states have modified many rate increases of 10% or higher.  For example:

  • The California Department of Insurance recently reduced rate increase requests for four individual rate increase filings, by an average of 9.65%.  This decision saved more than 87,000 Californians a total of $1,655,892 per month in premium increases.
  • In November of 2011, New York regulators used their new authority to reduce rate increases to an average of 8%.  Insurance companies had sought an average increase of 12.7%. New York’s decision is estimated to have saved consumers nearly $400 million.  New York also recently worked with Empire Health Choice HMO to modify three Small Group products, reducing a 17% increase to 8.9% for 34,186 enrollees, and a 16% increase to 9.5% for 1,740 enrollees.
  • The Oregon Department of Consumer and Business Services reduced a requested 22.1% increase to 12.8% for Regence’s non-grandfathered individual health plans.  The reduction has saved Regence enrollees approximately $12.5 million per year or $15.58 per member each month.

Data from the Affordable Care Act’s Rate Review grant program show that many states have strong review processes:

  • In a sample of the 35 states receiving rate review grants, 27 states have reduced, or sometimes rejected, the rate increases that insurers have proposed, ultimately putting more money in consumers’ pockets.
  • In the last three quarters, states reduced rates by, on average, 0.7%, 1.2%, and 4.5% respectively, with the last quarter representing state actions after the Rate Review program took effect.

States are using their authority and new grant resources created by the Affordable Care Act to reduce premiums:

  • In Oregon, from July 1, 2011 through September 30, 2011, the average rate requested in the individual market was reduced by over 10% from an average requested increase of 9.83% to an average approved decrease in premiums of 0.53% on a reported 7 filings, benefitting 30,562 people.
  • In Nevada, from July 1, 2011 through September 30, 2011, the average rate requested in the individual market was reduced by 18% from an average requested increase of 16.55% to an average approved decrease in premiums of 1.66% on 11 reported filings, benefitting 15,781 people.

Consumers Are Getting the Information They Need on Proposed Rate Increases

Rate review has dramatically enhanced transparency by posting all double-digit rate increases on

  • Through March 10, 2012, 186 proposed increases have been posted on this page.  Each provides an explanation from the insurer, and will include a determination from the state or HHS as to whether the increase is based on sound data and assumptions.
  • The rate review page has been visited 50,000 times with many consumers taking advantage of the opportunity to submit public comments on rate increases.

Rate Review Is Helping Consumers in All States

For the first time, consumers in all states can expect that any double-digit rate increase reviewed by an independent third party expert.  In many states, consumers are seeing rate increases slow-down or disappear altogether:

Connecticut: In September of 2011, Connecticut’s largest insurer submitted a 12.9% request to increase premiums for more than half, or about 25,000, of its individual health insurance customers.  After close review, the rate increase request of 12.9% was disapproved as submitted, and limited to an increase of 3.9%.

Maine:  Maine used rate review resources to enhance consumer education initiatives.  The effect of the enhanced consumer participation was seen in the recent denial of a significant rate increase requested by Anthem in the individual market, a decision unanimously upheld by the Maine Supreme Judicial Court.

Maryland:  During the most recent quarter, the Maryland Insurance Administration approved two increases smaller than requested. One insurer requested 3% - the state approved 1.7%.  Another insurer requested 12% - the state approved 9.9%.

New Mexico: New Mexico’s recently-created rate review system returned a filing by Blue Cross Blue Shield for a 9.9% increase. The hearing officer, who is funded by a rate review grant, held his first hearing on the matter on February 14, 2012.  Following news of the rejection, another major insurer in New Mexico withdrew a 9.9% increase and filed a 4.4% increase instead.

North Carolina: The North Carolina Department of Insurance noticed a decrease in the number of filings submitted during this quarter, and that a number of filings requested a change in rates that is below the threshold for reporting.

Closely Reviewing Proposed Increases

Through March 10, 2012, 186 increases affecting more than 1.3 million people have been posted on  Each provides an explanation from the insurer, including the rate increases determined to be unreasonable rate increases.

States are taking a strong lead in reviewing proposed rate increases.  Of the 186 requested increases posted on as of March 10, 2012, two-thirds (125 filings) of these are being reviewed by rate review programs in the states. Only one-third (61 filings) is under review by HHS.

In state reviews posted on, states such as California, New York, Washington, Oregon and Puerto Rico have modified or reduced rates that originally were proposed at above 10%.  Modifications have decreased the original proposals by an average of 6.4%, the highest modification being a reduction of 11.3 percentage points.

In the 61 instances to date where HHS is charged with conducting reviews, the Department has completed 28 determinations.  HHS has determined that 20 of the 28 proposed rate increases are unreasonable.  The most common reason for this determination is that the proposal would result in projected medical loss ratios (MLRs) below the 80% applicable threshold.


The Affordable Care Act’s Rate Review program has been in operation for six months.  In just six months, consumers in every state have been given access to unprecedented information explaining proposed changes to their premiums and whether these increases are based on sound data and assumptions.  And in many states during these six months, consumers have been protected from unjustified rate increases with action being taken against insurance companies who fail to give consumers value for their premium dollars.  The Affordable Care Act’s Rate Review program is empowering states and consumers to hold insurance companies accountable, while laying the groundwork for a more open health insurance market that will guarantee more consumers have access to affordable health care coverage when the Affordable Care Act is fully implemented.

Posted on: March 22, 2012