On April 9, 2010, Iowa’s governor Chet Culver signed measures (Senate File 2201) designed to create greater transparency and disclosure of health insurance premiums, and to expand the rights of consumers prior to any rate increases by insurance companies.  Among some of the highlights of the bill, Senate File 2201 requires:

  • all state-regulated health insurance companies to immediately notify policyholders of any application for a rate increase exceeding the average annual health spending growth rate stated in the most recent national health expenditure projection published by the centers for Medicare and Medicaid services of the U.S. Department of Health and Human services;
  • the commissioner of the Iowa Insurance Division (“IID”) to hold public hearings at the time a carrier files for proposed health insurance rate increases exceeding the average annual health spending growth rate mentioned above, prior to approval or disapproval of the proposed rate increases;
  • all state-regulated health insurance companies to cover mental health and substance abuse treatment for veterans who are employed by a business with more than 50 employees or a small business covered under a contract that includes treatment of mental illness and substance abuse; and
  • the creation of Health Care and Insurance Cost Work Group tasked with considering ways to reduce costs of providing health insurance coverage and services, including providing an annual assessment of the impact of federal health care reform legislation on healthcare costs of the State;
Click here for a copy of Senate File 2201, and click here for the related Executive Order 23, which establishes specific steps to be taken by the executive branch to work in concert with the legislature on this reform.

The bill is particularly timely, given the recent reviews of Wellmark Blue Cross Blue Shield’s (“Wellmark”) rate increases.  Wellmark notified policy holders that an 18% increase in rates was scheduled to go into effect April 1, 2010.  However, the Iowa State court stayed the increase and requested that the IID hire a certified actuary independent of Wellmark to conduct a secondary review (i.e., following the review conducted by the State).  On April 12, 2010, the IID posted the results of this secondary investigation by a Philadelphia firm, which found Wellmark’s proposed rate increases were justified based on anticipated lifetime loss ratios and higher incurred expenses.  For more on Wellmark and the investigations, click here for a copy of the letter sent by the IID in response to the Court’s request for a secondary review.