Kentucky Receives Federal Grant to Improve Review of Health Premiums

Aug 16th, 2010

The Kentucky Department of Insurance received notice today of a $1 Million grant awarded to the state from the U.S. Department of Health and Human Services to help improve the oversight of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.

Below is a summary of how Kentucky intends to overhaul its health insurance premium review process:

Current Authority:

Individual Market: All rates require the prior approval of the Department. Case traits (age, gender, occupation, geography and health status) can vary 5:1, and ratings bands are +/- 35 percent. Carriers must meet lifetime loss ratio of 65 percent.
Small Group Market: Same authority as individual. Rating bands is +/- 50 percent. Groups (2-10) have a minimum loss ratio of 70 percent and groups (11-50) have a minimum loss ratio of 75 percent.

Additional Legislative Authority: The Department of Insurance will propose legislation to expand the rate review process for large groups. In addition, actuarial consultants will evaluate whether revision or extension of laws are needed to enhance the rate review process.

Expand the Scope of Health Insurance Premium Review: Currently the Department of Insurance reviews rate filings for individual, small group and association products. Only the rating methodologies are reviewed for large group products. The department will increase the categories of data required to be filed by large groups and will expand its review of large group rate filings to include analysis of rate factors.

Improve the Health Insurance Premium Review Process: The DOI currently collects and can report on only a small portion of the data points needed. The department will increase the amount of data to be provided in a rate filing and will modify the review process to include consideration of plan years, underwriting issues and policy forms.

Make More Information Publicly Available: Currently, information about health insurance rates is not readily available to the public. The DOI will develop a publication to explain the rate review process, including the information submitted by insurers and reviewed by the DOI. The DOI will make information available to the public, in plain language, to give notice of specific rate increases and decreases. In addition, the DOI will conduct surveys and hold open meetings for consumers in order to determine what information would be useful for them to make well-informed health insurance decisions.

Read more about this important federal grant here.

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