The Department of Health and Human Services (HHS) says its latest rules will bring more transparency to the health insurance rate-setting process – and curb the huge price spikes we’ve seen recently.

Here’s what the new rules require:

• Starting Sept. 1, 2011, states with “effective” review systems in place must examine any insurer’s proposed rate increase of 10% or more. To be considered effective, states must have the resources to determine whether a rate increase is unreasonable — and allow for public comments about the increase.
• The HHS will help states strengthen their review process and conduct reviews for any state without an effective review system.
• In 2012, the 10% threshold will be replaced by state-specific thresholds that are based on insurance cost trends in those areas.
• The HHS will work with states to develop their thresholds.
• Insurers under review must provide consumers with clear information about the reasons for rate increases deemed “unreasonable” and post their justifications for the increases on company and government websites.
• Only states can reject rate increases. Currently two dozen states have laws that allow regulators to approve/disapprove certain insurance premium changes — and the laws vary widely.
• The rules only affect non-grandfathered plans sold in the individual and small group markets. The HHS sees these groups as being the most vulnerable to large rate increases.

If these rules sound familiar, it’s because they are nearly identical to a proposal the HHS issued last December. The rules were just finalized. The biggest change from the initial proposal? The rules will take effect in September instead of July.

The feds say the rules will moderate insurance rate hikes. Do you agree — or do you think insurance costs should be attacked from a different angle? Share your opinion in the Reply box below.

Tags: Department of Health and Human Services, health insurance, HHS, laws, rate, rate increases, rules, unreasonable