Arbitrary Premium Hikes Scrutinized In Key States

One of the critical components of the Affordable Care Act was new power for federal officials to review arbitrary insurance rate hikes. They are finally ready to use it:

The Obama administration will soon take over the review of health insurance rates in 10 states where it says state officials do not adequately regulate premiums for insurance sold to individuals or small businesses.

At least one state, Iowa, has protested the federal decision and asked administration officials to reconsider.

Several other states acknowledged that they lacked the power under state law to review health insurance rates. Several insurance commissioners tried and failed to get such authority from their state legislatures this year.

Starting Sept. 1, federal and state officials will begin to scrutinize proposed rate increases of more than 10 percent to determine if they are justified. White House officials say their ability to publicize excessive, unreasonable rates will be a major protection for consumers under President Obama’s health care law.

The states in question — Louisiana, Iowa, Alabama, Arizona, Idaho, Missouri, Montana, Wyoming, Pennsylvania, and Virginia — seem to be a combination of conservative states with high poverty rates that desperately need insurance market reforms, and swing states: Iowa, Virginia, and Pennsylvania. We cannot ignore the political implications of Obama making an aggressive play to publicize a popular component of his health law in advance of the 2012 elections in these states, as the more robust subsidies and insurance exchanges that will really boost the middle class will not kick in until midway through his second term.