Texas, as of now, had the policy of non-interference in hikes in premium rates unless it increased by 50% or so. But with the federal health reforms coming into the place, all that is going to change.
According to the new reforms, insurers have to justify the unreasonable hike in the price of the premiums. It is a consumer protection method being implemented by the Texas Insurance Department after the new heath laws are enforced.
Though Texas always has the authority to ask insurers about hikes in premiums, it was rarely used. Texas, traditionally, has always stayed away from interfering with the work of the insurers.
Katrina Daniel, the senior associate commissioner of the life, health and licensing program at the Department of Insurance has said, “The department is working out a time line for conducting more rate reviews.” She also stressed that the review does not mean that the state will deny an increase, as long as the insurers are able to justify their decision.
The law requires that the states and federal secretary of the Department of Health and Human Services hold insurers more accountable for what they charge customers. Starting with health plans this year, insurers will have to submit to the states and HHS Secretary Kathleen Sebelius a justification for an "unreasonable" increase before imposing that rate. The information also would have to be posted on the company's website. The problem here however is that the federal government has not defined the term ‘unreasonable’.
Texas has already received a federal funding of a million dollars which it will use to collect data, develop a public disclosure process to include information from insurers justifying their premium increases and upgrade technology for data analysis.
Though the time frame and details have not been worked out, one thing that is for sure is that Texas will be reviewing premium rates from now.
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