According to federal health officials, Montana has failed to create a system that will review health insurance rate increases in that state. The federal government will take over that task starting September 1, 2011. The federal government will give its opinion about whether rate increases are unreasonable, but, unfortunately, no one in Montana has the authority to reject those rates.
In 2010, there was a federal health reform law created. This law required all states to create their own health insurance rate review process. If a state fails to create one, then the federal government will review health insurance rate increases for that state, instead. In other words, states cannot decide to opt out of creating a rate review system.
Recently, the state of Montana was informed that the federal government felt that the state has failed to create a rate review process. As a result, health insurance companies in Montana will have to file their proposed rate increases with the federal government, starting on September 1, 2011.
If an insurance company wants to raise its rates by more than 10%, the federal government will closely review the rate, and will make a determination if the rate is acceptable, or “unreasonable”. The federal government will make the data, and its opinion of it, available to the Montana state auditor and insurance commissioner, Monica Lindeen.
This is the part where things get a little strange. The federal government doesn’t actually have the power to change an “unreasonable” rate that an insurance company wants to impose on its customers. The Montana state auditor and insurance commissioner doesn’t have the legal authority to do that either. Both governments will have the information about rate increases made available to them, but, it seems that they can do nothing more than just look at it.
California recently proposed a bill that, if signed into law, would give the California insurance commissioner the legal right to reject rate increases made by health insurance companies. There has been a lot of controversy as lawmakers from opposing political parties state their opinions about the consequences of passing, or refusing to pass, this bill into law. Health insurance groups are also weighing in with their opinions.
At this time, Montana has yet to create a bill that would, if passed into law, give its insurance commissioner the legal right to reject “unreasonable” health insurance rates.
In Montana, it seems that there once was a bill that, if passed, would have allowed the state to begin creating its own insurance rate review system. This bill was “killed” by the Republican controlled legislature, that did not want to implement anything having to do with the new federal health reform law. Since then, the issue has gone back and forth, with each political party pointing the blame at the other for failing to create an insurance rate review system. The result is that the federal government will be getting involved.
Image by Sebastian Bergmann on Flickr