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Big health insurance rate hikes are plummeting

The number of double-digit rate increases requested by health insurers has plummeted over the past four years, according to a Friday report from the Obama administration.

Researchers combed through data available from the 15 states that publicly post all requests for rate increases in the individual market. They found that, in 2009, 74 percent of all requests came in above 10 percent. By 2012, that number had fallen to 35 percent. Preliminary data for 2013, which only cover a handful of states, shows 14 percent of rate increases asking for a double-digit bump. Here's what this looks like in chart form:

Does Obamacare get credit? The administration thinks so: Officials there argue that this has a lot to do with the health law's rate review program, which requires all rate hikes above 10 percent to undergo additional regulatory scrutiny. Each of the rates gets reviewed by a state or federal regulator and determined "reasonable" or "unreasonable."

The provision started in September 2011, and that's right when you see the steep decline in big rate hikes start.

"The sharp drop in requests for increases of 10 percent or more is most likely the result of the increased scrutiny that rate increases of 10 percent or more now receive," the report states.

One other possible explanation: Over this time period, there has also been a big slowdown in the rate of health care cost growth. That began in 2009, so it's not completely impossible that the health insurance industry, noticing that trend, began pricing individual market products at lower rates.

The administration has considered that idea though and looked at the large group market to test it. If the health cost slowdown really was driving lower premiums, the thinking went, it would show up across all insurance products.

It didn't: Researchers did not see a similarly large drop in rate request in the group market.

It's worth keeping in mind that the health insurance rate hikes that the Obama administration has access to are only those that are posted publicly online. It's possible that there's something different about the 15 states represented here from those that are less transparent with their insurance markets.

At the same time, the data do represent about one-third of the entire individual market and the states represented are geographically diverse, from Florida to Washington.



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Dylan Matthews · February 22, 2013

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