WASHINGTON - Moving to restrain skyrocketing health insurance premiums, the Obama administration is proposing new rules requiring insurers to justify increases of more than 10 percent a year in 2011.
At the same time, administration officials are planning to step up federal review of premiums if state regulators cannot adequately protect consumers, a move cheered by consumer advocates.
"Ultimately, we know that the bright light of sunshine convinces more insurers to think twice and check their math before submitting large rate hikes," Secretary of Health and Human Services Kathleen Sebelius said Tuesday in announcing the proposed regulation, authorized by the new health care law.
Reliance on states
The increased oversight comes as consumers nationwide struggle with rate increases that have exceeded 30 percent in some places, even as insurance industry profits have swelled.
In the lead-up to passage of the new law, the soaring rates fueled calls to give state and federal regulators more power to scrutinize premiums and even deny increases that appear unjustified. Only some states currently have such authority.
The draft regulations presented Tuesday would not give state or federal officials the ability to deny rate increases. Instead, the administration is relying on state regulators to scrutinize proposed increases and to assess whether they are justified by increases in the cost of care or other factors.
Insurance companies have said their rate increases are being driven by the rising cost of health care, an assertion that the industry's senior Washington lobbyist reiterated Tuesday.
