Under the 2010 federal health care reform law, Texas is reviewing medical insurance companies' rate increases of at least 10 percent to determine whether they are justified, but even if reviewers find a problem, they have no way of heading it off or even letting the public know about it.
"There is nothing the state can do to stop that rate from going into effect," said Stacey Pogue, a policy analyst at the Center for Public Policy Priorities, which advocates for low- and middle-income Texans.
During the last session, the GOP-controlled Legislature talked a lot about killing President Barack Obama's health care overhaul and expended very little energy trying to make sure that state agencies were ready to implement the massive new measure. Plus, there was much confusion about the details of the law.
So, with all the ambiguity and the Legislature's lack of attention, the Texas Department of Insurance was left without the specific authority to deny excessive health insurance rate increases. And when the review provision took effect five months ago, the agency did not create a system to publicize big rate jumps.
John Greeley, a department spokesman, said in a statement Friday that the agency is developing a process to provide consumers with information about rate increases.
Since September, the federal Patient Protection and Affordable Care Act, known to critics as Obamacare, has compelled health insurance companies to inform state and federal insurance regulators when they want to increase rates for individual or small-group policies by an average of 10 percent or more.
Then, state officials — or federal regulators, if a state doesn't have the capacity to review rates — review the increases to determine whether they are reasonable.
Texas is considered one of the weaker states in the nation in terms of statutory authority to review health insurance rates.
The Henry J. Kaiser Family Foundation, a nonprofit focusing on health care issues, noted in a December 2010 report that 35 states had prior approval authority over at least some portion of the individual and small-group market. Texas isn't one of them.
"An unreasonable rate increase that could be stopped in most other states, cannot be stopped by TDI," Pogue said.
Currently, the Texas Department of Insurance is reviewing two rate increases. Trustmark Life Insurance filed for a 10.6 percent average increase in September for one of its small-group products. The increase affects 8,201 Texans, according to the U.S. Department of Health and Human Services.
The federal agency found that the Illinois-based company's rate increases in five other states were unreasonable.
Trustmark said the increase in Texas was made to "ensure the continued financial soundness" of the company's product offering, according to the company's explanation filed with the federal Department of Health and Human Services. Further, the company cited high medical costs, climbing administrative costs and insufficient prior rates as additional reasons for the increase.
The Texas Insurance Department is also reviewing an increase from the Connecticut General Life Insurance Company, which raised its average rate 44 percent for small-group coverage. Only two Texans are affected, according to the Department of Health and Human Services.
While the Texas Insurance Department doesn't have authority to prevent companies from raising rates, several other states do have rate-setting authority.
New Mexico, for example, denied a request from Presbyterian Healthcare for a 9.7 percent rate hike, reducing it to 4.7 percent. Also, Connecticut stopped Anthem Blue Cross Blue Shield, the state's largest insurer, from boosting rates by 12.9 percent, limiting the increase to 3.9 percent.
Additionally, Oregon denied a company, Regence, from jacking up a rate by 22.1 percent and limited the company to a 12.8 percent increase.
State Rep. John Smithee, a Republican from Amarillo and chairman of the House Insurance Committee, said legislators were stalled on increasing the Insurance Department's rate-making power last session, and some Republican leaders vowed to fight the federal law.
But Smithee added that he would consider a bill that would give the department "some sort of recourse or remedy" to deal with unfair rates.
"It's certainly something I'd be willing to look at," he said.
Texas and 45 other states, and the District of Columbia, received grants of $1 million apiece in 2010 from the Department of Health and Human Services to help improve the review process for proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes and ensure consumers get proper services, the department said.
Texas did not use all of its grant money within the allotted time, but it received an extension to spend the money.
Pogue said for the Texas Department of Insurance to maintain and expand its rate review function, it will need to use all of the current money and apply for additional federal grants.