New Trump Administration rules undermine health insurance consumer protections

U.S. PIRG

Statement by Jesse Ellis O’Brien, US PIRG Health Care Advocate, on release of new federal health insurance regulations known as the “Notice of Benefit and Payment Parameters” (PDF)

American consumers know that health insurance still costs too much and delivers far too little for what we pay. Unfortunately, new rules announced today by the Trump Administration will likely make matters even worse.

The federal Department of Health and Human Services (HHS) finalized new regulations today that threaten the affordability of health care even further, and reduce the value of health insurance coverage for American consumers.

Currently, if a health insurer proposes a rate hike of 10% or more, it has to explain the reasons for the premium increase, and go through a public review process to determine whether the higher rate is justified. The new rule will lift the threshold to 15%, meaning that many large rate hikes will go into effect without any public review.

If anything, the current standard is too weak. Even a 9% rate hike is much bigger than the rate of inflation. Insurers should be required to tell the public why a big hike is necessary. Weakening this standard is a disservice to consumers.

The new rules also water down the requirement that health insurers spend at least 80% of our premium dollars on health care services—not administrative expenses and profits—or rebate the difference back to consumers. Under this requirement, known as the Medical Loss Ratio or 80/20 Rule, insurers rebated more than $1.6 billion to consumers from 2012-2015. The new rule could reduce the requirement to as low as 70%, and will enable insurers to pass more administrative expenses off as medical costs.

Together, these changes will make it easier for health insurance companies to raise rates and reduce the value of health coverage for consumers. This is a big step in the wrong direction.

When these rules were proposed last Fall, 8,000 US PIRG members and supporters across the country wrote to HHS in opposition to these changes. American consumers are fed up with unjustified health insurance rate hikes, and these weaker protections are the last thing we need. American consumers need real health care reform, and we will continue our work to hold our leaders accountable for delivering meaningful results.