What is a good way to determine if insurance rates are reasonable?
Last week, HHS official Jay Angoff, who heads the department's insurance oversight office, said the agency was working on the regulation that would define a "reasonable" increase in health insurance premiums. Angoff said HHS was focused on medical trends, or the rate at which medical expenses generally increase.
"If you [increase premiums] by two or three or four times more than the medical trend," said Angoff, "we wonder how it is justified."
But an August decision from the Massachusetts state insurance division determined that a strict interpretation of medical inflation alone was not enough to deny an increase in one insurance company's rates, because it did not consider future costs or those comparable to the company's prospective claims.
If medical inflation is not a sound calculation on its own, what else should be used to determine reasonable rates? Will a more general picture of rising costs in the health industry produce a sufficient threshold for what is "reasonable"?