Christie Administration Harshly Criticizes Obamacare Rate Review Regulation

04/26/2011 - 12:26pm

From time to time we check back on Obamacare regulations after their comment periods have closed to see what others are telling the Obama Administration about these regulations.

Thomas Considine, Commissioner of New Jersey’s Department of Banking and Insurance under Governor Chris Christie, submitted a comment to the Department of Health and Human Services (HHS) on February 14, 2011 soundly criticizing HHS's insurance rate review regulation.

The rate review regulation would subject health insurance premium increases greater than 10% to state review to determine if the increase is "unreasonable." But if HHS deems the state's review process to be inadequate, HHS will conduct the review itself.

Commissioner Considine outlines three problems with the regulation.

  1. The regulation's standards are “largely subjective”:

A determination by HHS that a rate increase in a state is ‘unreasonable’ based on these largely subjective criteria could be very destabilizing to a local market. The proposed regulation, however, provides no opportunity for state input into that determination if made by HHS. It also appears that the determination is final and unappealable, without opportunity for notice and hearing. Even a determination of obscenity is appealable to the Supreme Court.

The proposed rule neither defines unreasonable nor identifies clear objective criteria HHS will apply when making that determination.

  1. While purporting to preserve state autonomy, the regulation does exactly the opposite.

This is not a process established in partnership with states, but a conscription of state resources and usurpation of authority. It is the state [that is] charged with both [the] responsibility for both consumer protection and the ongoing solvency of insurers. It is the state, therefore, that must continue to have primary rate review authority.

  1. The regulation is an unlawful exercise of federal power. We made the same argument in our comment on the same regulation, but Considine makes his argument from another angle. He says that the regulation violates the McCarran-Ferguson Act of 1945 (15 U.S.C. § 1011 et seq.):

That Act provides that the “business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.” It further provides that no act of Congress shall invalidate any state law unless by its express terms. Nothing in the Affordable Care Act provides any authority for the Federal Government to establish standards for state rate review, to require state reporting of the results of that review to HHS, or to review and opine on the majority of all rate filings in states without a review process they deem acceptable.

The letter is available at: