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New federal law requires public disclosure of large rate hikesPosted On Thu, September 1, 2011
A new federal law, which goes into effect today, forces insurance companies to give valid justification to state or federal regulators for any increase in health insurance rates of 10 percent or more.
Officials say the process will push insurance companies to avoid levying excessive hikes on consumers when they aren't warranted, because of the public backlash which could result.
However, some groups say simple disclosure won't be sufficient. Consumer Watchdog, a nonprofit, says laws need to give regulators the power to refuse any rate increases they find excessive.
"Disclosure alone will never be enough to prevent health insurers from charging unreasonable insurance premiums," said Carmen Balber, Washington director for Consumer Watchdog. "Without at least the threat of enforcement, public complaints about unreasonable increases will continue to fall on deaf ears."
Healthcare costs are a significant part of many families' budgets. Previous reports have estimated the country's annual healthcare spending at $2.5 trillion.
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