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GAO-13-712R 1 (2013-07-23)

handle is hein.gao/gaobaahdq0001 and id is 1 raw text is: cAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 July 23, 2013 The Honorable Orrin G. Hatch Ranking Member Committee on Finance United States Senate Subject: Private Health Insurance: The Range of Base Premiums in the Individual Market by State in January 2013 Dear Senator Hatch: Millions of Americans obtain health coverage by purchasing private health insurance,1 including over 11 million individuals who purchased individual market plans in 2011.2 These Americans may be purchasing individual health insurance for a variety of reasons, including being self- employed or a small business owner, or because their own employer does not offer insurance. Currently, in most states, under applicable law, individual health insurance market premium rates may vary on the basis of age, gender, health status, and other factors. In addition, states vary in their specific requirements for what insurers can consider in underwriting, which is the process of assessing the health status of the insurance applicant and setting the premium according to the health risk of that individual.3 With certain exceptions, when individuals purchasing coverage in the individual market undergo underwriting, they can have their coverage denied, offered at a higher-than-average premium, or offered with a rider that excludes coverage of a preexisting condition.4 The Center for Consumer Information and Insurance Oversight (CCIIO) within the Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS) currently maintains an online portal-the HealthCare.gov Plan Finder-that displays insurers' base premiums prior to underwriting to assist consumers in comparing health insurance coverage options in the individual market. The Patient Protection and Affordable Care Act (PPACA) included a number of provisions that could affect private health insurance requirements and the resulting cost of individual health insurance premiums. For example, insurers will no longer be able to use gender and health 1Private health insurance includes individual and group market plans. Participants in the individual market purchase health insurance coverage directly from a carrier. Group market participants generally obtain health insurance coverage through a group health plan, usually offered by an employer. 2Centers for Medicare & Medicaid Services, The 80/20 Rule: How Insurers Spend Your Health Insurance Premiums (Baltimore, Md.: Feb. 15, 2013). 3Bernadette Fernandez, Congressional Research Service, Drivers of Premium Increases and Review of Health Insurance Rates (Washington, D.C.: January 20, 2012). In any given state, premiums may vary according to the rating factors allowed by the state. For example, a state may prohibit premiums in the individual market from varying based on health factors, but may allow premiums to vary based on age, gender, or other risk factors. 4A preexisting condition is a health condition that exists before someone applies for or enrolls in a new health insurance coverage. 5This online portal was established pursuant to a requirement in the Patient Protection and Affordable Care Act (PPACA), Pub. L. No. 111-148, §§ 1103(a), 10102(b), 124 Stat. 119, 146, 892 (2010). The Plan Finder can be found at http://finder.healthcare.gov/. GAO-13-712R Range of Health Insurance Premiums in 2013 Page 1

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