Require insurers to justify rate increases and receive approval for those increases before they may be implementedGuarantee the public's right to intervene to further reduce ratesIncrease federal grants to states for development of prior approval regulationsImplement strong federal fallback regulations to take effect in states that do not adopt effective prior approval regulationRequire consumer premium refunds if rates that have already gone into effect are later found to be excessive
"Prior approval" regulation would help contain health insurance rate increases by requiring insurers to justify proposed increases before raising rates, and allowing thorough scrutiny of insurance company finances. For example, such regulation would require Anthem Blue Cross of California to open its books to scrutiny by the public and independent actuaries and explain why a recent 39% rate increase was necessary. In particular, the company would be required to explain why the increase was necessary in light of the fact that the company transferred $4.8 billion in profit to parent company WellPoint Inc. since the company merged in 2004 with Anthem. Read more about Consumer Watchdog's analysis of Anthem Blue Cross's profit transfers, and a chart of all known transfers since 2003:
California's landmark prior approval rate regulation for auto insurance, Proposition 103, has saved drivers in California $62 billion since 1988, and is a model for health insurance reform. Read more in a 2008 Consumer Federation of America report at: consumerfed/elements/wwwnsumerfed/file/finance/state_auto_insurance_report.pdf
According to the Consumer Federation of America, under Prop 103:
California drivers have saved $61.8 billion in auto insurance rates, an average of $1670 per Californian California is first among all states in holding down insurance premiums, with a 12.9% increase compared to an average national increase of 50% California is the fourth most competitive auto insurance market in the nation; Completely unregulated Illinois ranks 44thSOURCE Consumer Watchdog