How we review health rates
We review all rate requests for individual and small-group plans (employers with 1-50 employees) in Washington state.
Health insurance companies can't change rates more than once a year, unless state or federal law requires a new health benefit.
Factors that affect rates
Individual and small-group health insurance rates are community rated. This means the rates are based on the combined claims everyone files. This is why your rate may go up even if you haven't filed a claim.
Also, the rising cost of medical care impacts rates.
In general, how much you pay depends on:
- Your age and the age of any family members in your plan;
- Your family size;
- Whether or not you smoke;
- Where you live; and
- The benefits in your health plan.
What we do
We scrutinize the company's projections and what they're based on, including the last three years' premiums, enrollment, and claims.
We also examine the following information to see if the rate change is reasonable in relation to the plan's benefits:
- The premiums, claims and administrative costs are consistent with what the company reported in its financial statement.
- The actual vs. projected medical and prescription-drug costs.
- The assumptions used to project the medical and prescription-drug costs, including changes in these costs, and in the benefit design.
- The actual vs. projected administrative costs, including expenses such as agent commissions, taxes, salaries, case-management activities, claims and appeals-processing costs, customer services, etc.
- How much profit the company expects to make; this is generally called "contribution to surplus" or "projected profit." Whether this amount is considered reasonable depends on the company's current level of surplus, as well as the type of business.
If we believe the rate request is justified, state law requires us to approve the increase.
If we don't believe the rate increase is justified we deny the increase. The insurer can then revise its rate-increase request, or it can request a hearing.