California gets federal funds to review health insurance rates

September 22, 2011
By Darrell Smith, The Sacramento Bee

California won more than $4.3 million in federal grants to improve its reviews of health insurance rates, but the state’s insurance commissioner said California missed out on potentially more funds.

The state’s Department of Insurance will receive more than $2.1 million. Part of the money will be used to hire more staff to speed rate reviews, and some will be used to award grants to consumer groups so that they may more effectively review and comment on rate hikes.

“We know rate review works,” Health and Human Services Secretary Kathleen Sebelius said in a statement announcing the Affordable Care Act grant awards. “States continue to have the primary responsibility for reviewing insurance rates and these grants give them more resources to hold insurance companies accountable.”

More than $50 million in rate review grants have been awarded to 42 states, the District of Columbia and U.S. territories.

A provision of the Affordable Care Act that kicked in Sept. 1 requires health insurers seeking to raise individual and small group rates by 10 percent or more to submit their requests for review.

The rest of California’s award, $2.2 million, will go to the Department of Managed Care, whose rate review role to date has been limited. The money will be used to build the department’s data collection and IT services so it can post rate information on its public website.

Though happy to receive the funds, Insurance Commissioner Dave Jones’ office was frustrated by the missed potential for more money. States with the authority to regulate health insurance rates received $600,000 in additional federal grant funding.

“I am disappointed that California continues to lack the authority to reject excessive rate increases once we review the proposed rates,” Jones said in a statement.

Jones has made rate review a centerpiece of his tenure. He has pushe

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