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At least 10 health insurance companies operating in Utah have imposed premium increases of up to 16 percent, which they blame solely on federal health reform.
The rate hikes apply to policies sold to small businesses and individuals the path to coverage for about 38 percent of Utahns and are under review by Utah regulators.
As reasons for the hike, insurers cite some of health reform's early consumer benefits: free preventive care; allowing married, young adults to stay on their parents' health plans; the elimination of lifetime caps on coverage for children; and the prohibition barring insurers from rejecting kids with pre-existing conditions.
The companies claim "the increases don't reflect administrative costs, just the cost of providing these new benefits," stressed Utah Health Insurance Division Director Tanji Northrup.
Whether regulators are able to stop questionable premium hikes is unclear.
Until last week, the Utah Department of Insurance allowed rate increases of up to 86 percent unless a consumer complained. The Affordable Care Act now requires insurance companies to disclose "unreasonable" increases and justify them at public hearings.
But the federal government has yet to define what "unreasonable" is. And it will be up to the insurance companies to flag increases as unreasonable, not regulators.
To keep insurers honest, all rates will be reviewed up front, says Northrup. "So if they don't file it as unreasonable, we'll catch it."
Utah regulators have had this authority all along, but have exercised it sparingly due, in part, to lack of resources.
With a $1 million federal grant, the state Insurance Department is building a computer-based system to collect and manage data required to meet the new reporting requirements. Right now, for example, the agency can't compare this year's rate increases to those of previous years.
"It would literally require opening all the rate filings individually," says Northrup, noting there were about 4,600 this fiscal year alone.
Those rate filings are classified as proprietary and "protected" under the state's open records law. So are policyholder complaints.
Though painful, a 16 percent bump in premiums is a sliver of what some Utahns will shoulder this year. During the past three months, Northrup's office has investigated nine consumer complaints of exorbitant rate hikes, some in the 30 to 40 percent range.
The complaints target four different health insurers. Most are still under review.
Two were resolved in favor of the insurer, and a third in favor of the consumer, with the insurer forced to issue a rebate, Northrup said. The complaint was also referred to the agency's market conduct division to determine whether the problem affects other policyholders.
Northrup downplays fears that insurers could game the system and push rate increases through now before federal law requires greater transparency.
"I don't have a sense yet on how high increases will be compared to last year. Our best indicator won't be until later this fall when groups will be renewing for January 1," she said. "But we have a very competitive market. If an insurer were to take advantage, it would negatively affect their market share."
Rate increases in Utah have tracked medical inflation and averaged 8.7 percent per member per year during the past decade.
That's cold comfort to consumers like Mary Brett, of Salt Lake City. In June, Humana raised Brett's premium by 29 percent and the 56-year-old massage therapist complained to the Utah Department of Insurance.
"I'm glad they're taking it seriously and looking into it. But I'm not optimistic it's going to change anything," Brett says. "The deck is stacked."
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