HHS: Insurance Premium Increases 'Unreasonable'

The U.S. Department of Health and Human Services declared insurance premium hikes of 13 percent or more in five states to be unreasonable.
by | January 12, 2012
 

The U.S. Department of Health and Human Services has determined that health insurance premium increases in five states by Trustmark Life Insurance Company were unreasonable, the agency announced Thursday.

The rate increases in Alabama, Arizona, Pennsylvania, Virginia and Wyoming, which would have affected 10,000 residents, according to HHS, were found to be unreasonable after an analysis by independent experts consulted by HHS. Under the Affordable Care Act (ACA), HHS has "rate review authority" to review premium increases of more than 10 percent.

Trustmark had planned to increase premium rates in those five states by 13 percent or more, according to HHS. The department, based on the independent review, decided that the company would be spending a low amount of its premium revenue on medical care and quality improvement. In a conference call with reporters, Greg Cohen, Acting Director of Oversight, Center for Consumer Information and Insurance Oversight at HHS, said Trustmark now had the option to rescind its rates, provide rebates to customers or publish a public justification for the rate increase.

Since the passage of the ACA, more states have opted to adopt their own rate review authority, Cohen said, bringing the total to 37 states that have the authority to reject premium rate increases. HHS holds rate review authority for the remaining states, including the five included in Thursday's determination. However, Pennsylvania has passed a law to assume control of rate reviews, which goes into effect in March, Cohen said.

HHS provided several examples of states using their own rate review authority to limit rate increases. Connecticut reduced a planned 12.9 percent increase by Anthem Blue Cross Blue Shield to 3.9 percent. Oregon dropped a proposed 22.1 percent increase by Regence down to 12.8 percent. Cohen said he was unaware whether the remaining 13 states would pursue their own rate review authority in the future.

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