What you can do to stop insurance rate hikes
Premiums for most types of insurance rise every year, often by double digits. As a consumer, are you obligated to either pay up or drop the policy altogether? Or can you fight a proposed rate hike before it happens?
It’s not worth battling your insurance company directly, says Carmen Balber, director of the Washington, D.C., office of advocacy group Consumer Watchdog. “Simply complaining that your rates are too high will fall on deaf ears,” she says.
However, other strategies might be more effective. Here’s a look at what you can do to prevent insurance companies from hammering you with massive rate increases.
Pay attention to proposed rate increases
Insurance rate increases for auto, home and long-term care insurance and some health insurance plans often are subject to approval by state regulators.
Some states, including Massachusetts and Minnesota, have a history of transparency in the rate review process for health insurance and have offered consumers the chance to see proposed increases in advance, while others — such as Idaho and Illinois — have not. However, a provision of the federal health care reform law ensures that all consumers have the opportunity to view details about proposed rate increases for health insurance before they’re enacted. Additionally, proposed increases exceeding 10 percent now are evaluated by independent experts to ensure the increases are justified.
Under the federal health care reform law, $250 million is being doled out to strengthen states’ rate review processes; for states that don’t have the capacity to complete rate reviews, the U.S. Department of Health and Human Services will do them.
You can view pending or approved health insurance rate increases for your state at http://companyprofiles.healthcare.gov/.
Depending on your state’s laws, you also may be able to view pending rate increases for other types of insurance on your state’s insurance department website. In Louisiana, for instance, consumers can download a document from the Office of Property and Casualty that delivers details about all pending rate filings for property and auto insurance. The Texas Department of Insurance provides documents showing property insurance rate filings for the past year.
Take advantage of “public comments”
Some state insurance departments offer a time period (usually 30 days) when consumers can respond to a proposed rate increase for individual and small group health policies, either in writing or at a series of public forums that typically include insurance executives and state insurance officials.
By speaking up against rate increases and clearly stating how they affect you, you’ll be able to show your opposition to the state insurance department, which may be able to rein in the insurer’s rate-hiking plans. Media representatives also attend these hearings, so coming up with sound bites that include concrete examples of why a rate increase may not justified can help gain media attention and boost public awareness.
“Public protest does make a difference,” Balber says. “When consumers mobilize to go to hearings and express their frustration, we see that have an impact. Insurance companies will occasionally back down if they’re getting extreme pressure to do so.”
California’s Proposition 103, requires insurers to seek approval from the state Department of Insurance before bumping up property and casualty insurance rates, lets consumers offer online feedback about rate proposals. In some cases, consumers who offer “valuable technical feedback” will be reimbursed for legal fees and other expenses.
However, it may be difficult for most consumers to participate directly if they don’t have extensive knowledge of the insurance industry. “They need expertise,” says Sonja Larkin-Thorne, a consumer advocate with the National Association of Insurance Commissioners. “They need to be able to understand rate filings and their components.”
Join forces with a consumer advocacy group
It’s often said that there’s strength in numbers. When it comes to insurance, you’re likely to have the greatest effect by working with an established consumer advocacy group or even starting your own, Larkin-Thorne says. “I would encourage all consumers to find out what consumer groups are active within their states,” she says.
The consumer group Oregon State Public Interest Research Group’s sister group, the OSPIRG Foundation, is one such example. The foundation’s Health Insurance Rate Watch Project studies and analyzes health insurers’ proposed rate increases, shares its findings with state officials and the general public, and encourages consumers to participate in the rate review process.
Efforts of groups like OSPIRG Foundation have made a difference in limiting rate hikes. Regence BlueCross BlueShield customers saved $12.5 million after state insurance officials cut the company’s proposed 22 percent rate increase to 11 percent.
Nationally, groups like Consumer Watchdog focus on state and federal legislation that can protect consumers from sky-high insurance rate increases. The organization’s Campaign to Make Health Insurance Companies Justify Their Rates is encouraging people to take action by adding their names to petitions, signing up for alerts and volunteering in the campaign office.
Work to promote better legislation
For consumers to have a stronger voice in the rate review process, effective legislation is key.
In California, for instance, the 1988 enactment of Proposition 103 has saved consumers $61.8 billion in premium costs, according to the nonprofit Consumer Federation of America. Compared with an average premium hike of 50 percent in all states between 1989 and 2005, California’s auto and home insurance premiums went up by less than 13 percent during that time.
In 2010, Massachusetts Gov. Deval Patrick changed the timeframe for health insurance rate reviews for most plans from 30 days to 90 days, and required insurers to give detailed justifications for proposed rate increases. After enacting these new measures, the governor rejected rate increases for 235 of the 274 filings that year, although some of the carriers later reached settlements with the Department of Insurance to impose more limited increases.
If your state lacks strong regulatory laws, you can get involved in ballot initiatives that seek greater accountability. In California, for instance, Consumer Watchdog has spearheaded a ballot initiative that would compel health insurance companies to justify their rate increases. The group needed 504,000 signatures to qualify for the ballot; thanks to strong support, the group got more than 800,000. The ballot initiative will go before voters in 2014.