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Rising health-insurance premiums prompt new rules

The Obama administration is requiring insurers to justify rate increases of more than 10 percent.

WASHINGTON - Pushing to restrain skyrocketing health-insurance premiums, the Obama administration Tuesday set out new rules requiring insurers to justify any increase of more than 10 percent a year.

And administration officials outlined new efforts to increase federal review of premiums if state regulators do not have the capacity to protect consumers.

"Year after year, insurance company profits soar, while Americans pay more for less health-care coverage," Secretary of Health and Human Services Kathleen Sebelius said Tuesday in announcing the regulation, which was authorized by the new health-care law President Obama signed in March.

"The Affordable Care Act is bringing unprecedented transparency and oversight to insurance premiums to help rein in the kind of excessive and unreasonable rate increases that have made insurance unaffordable for so many families."

The reporting requirement falls short of the kind of rate review that many Democrats, including the president, wanted to put into the health-care law.

While some states give their insurance commissioners the authority to review premium increases and stop them before insurers can pass them on to consumers, most state regulators have only limited powers to halt rate hikes they deem unjustified.

And the Obama administration and its allies on Capitol Hill were stymied in their drive to give regulators enhanced authority.

Under the new health-care law, states retain primary responsibility for policing the insurance industry. Champions of increased oversight hope that the increased transparency in the new regulations will help deter insurers from seeking unreasonable rate hikes.

Under the new rules, insurance companies that seek rate increases of more than 10 percent next year will have to post their justifications on the federal government's new health-care website,

On Tuesday, the new rules were quickly applauded by consumer advocates, who called them a victory for customers.

"These new rules will help stop health-insurance companies from ramming unjustified premium rate increases down our throats and basing double-digit rate hikes on phony calculations," said Ethan Rome, executive director of Health Care for America Now, a leading advocate for increased insurance regulation.

Earlier this year, the administration handed out grants to states to help them bolster their own rate-review capacity.