Lower Insurance Rates Saved Consumers $1 Billion in 2013

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In 2013, lower health insurance rates saved consumers a total of $1 billion. States that enhanced their rate review programs will receive $25 million in rate review grant awards.

In 2013, lower health insurance rates saved consumers a total of $1 billion, according to a new report released by HHS Secretary Sylvia M. Burwell. She also announced 21 states would receive $25 million in rate review grant awards.

Through the Affordable Care Act (ACA)’s “rate review” provision and state efforts, consumers are already benefitting from lower-than-requested premium increases. Individuals saved $290 million in 2013 and small employers saved a total of $703 million. The ACA requires insurance companies publicly justify any rate increase of at least 10%.


“Before the Affordable Care Act, consumers regularly faced significant annual premium increases,” Burwell said in a statement. “In 2013 alone, we see that rate review programs saved consumers approximately $1 billion while providing them with the information they need to get the care they deserve.”

According to HHS’ report, implemented rate increases were smaller than what was originally requested in both the individual and small group markets. This is consistent with a trend in place since the rate review provision went into effect.

Rate review works in conjunction with the 80/20 rule, which requires insurers spend at least 80% of premium dollars on patient care and quality improvement activities. Insurers that spend an excessive amount on profits and “red tape” owe a refund to consumers, according to HHS. In 2012 and 2013, refunds from the 80/20 rule and lower than initially requested rates saved consumers more than $2.8 billion total.

States that enhance their rate review programs and bring greater transparency to the process are awarded Health Insurance Rate Review grants. This funding supports state efforts to review rate increases, educate consumers, help hold insurance companies accountable, and scrutinize medical pricing data.

The following 21 states are receiving awards: Arizona, Arkansas, California, Delaware, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, Oregon, Rhode Island, Utah, Vermont, Washington, and Wisconsin.