By Elizabeth D. Festa
Health insurance rate hikes in five states have been deemed “unreasonable” by the U.S. Department of Health and Human Services, under the 2010 Patient Protection and Affordable Care Act, HHS Secretary Kathleen Sebelius announced today, this time targeting Trustmark Life Insurance Company’s premium increases
HHS alleged that Trustmark Life Insurance Company, a division of Trustmark Cos., in Lakeforest, Il., has proposed “unreasonable” health insurance premium in Alabama, Arizona, Pennsylvania, Virginia, and Wyoming, affecting nearly 10,000 residents across these five states.
"It’s time for Trustmark to immediately rescind the rates, issue refunds to consumers or publicly explain their refusal to do so," Sebelius stated.
To make these determinations, HHS used its new rate review authority from the PPACA to determine whether premium increases of over 10 percent are reasonable. PPACA includes features that are meant to promote transparency and hold insurers accountable for rate increases and how they spend your premium dollars. Under the rate review
feature, which took effect on Sept. 11, health insurance companies must tell consumers
when they want to increase insurance rates for individual or small group policies by an average of 10 percent or more.
HHS determined that the rate increases were unreasonable because the insurer would be spending a low percent of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions, the agency stated.
“We got the press release and we have people looking it over right now,” said a company representative. Trustmark received the press release at the same time as reporters.
In the five states, Trustmark has raised rates by 13 percent. For small businesses in Alabama and Arizona, when combined with other rate hikes made over the last 12 months, rates have increased by 27.2 percent and 18.1 percent, respectively.
In November, the first health insurer identified by the HHS as charging too excessive a rate was Everence Insurance. HHS went after the Goshen, Indiana-based insurer, a ministry of Mennonite Church USA, for charging small businesses in Pennsylvania "unreasonably high premium increases."
“We have called on this insurer to immediately rescind the rate, issue refunds to consumers or publicly explain their refusal to do so,” Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare & Medicaid Services (CMS stated back then.
However, Everence told National Underwriter, "based on the information we now have from HHS, we plan to keep the rate increase in place."
An HHS review has found that Everence’s 12 percent rate increase for small businesses in Pennsylvania was excessive. Independent experts, HHS claimed, determined the choice of assumptions the company based its rate increase on reflected national data rather than reliable and available state data, leading to an “unreasonably high premium in relation to the benefits provided.”
action, and today’s mark the first of many reviews that HHS will perform in addition to insurance rate reviews already being done by states, the agency said. Proposals to raise rates by 10 percent or more will be reviewed.
HHS noted that many states have the authority to reject unreasonable premium
increases. Since the passage of the health care reform law, the number of states with this authority increased from 30 to 37, with several states extending existing “prior authority” to new markets.
HHS gave these examples of how states have acted, naming New York, New Mexico, Connecticut, Oregon Rhode Island and even Pennsylvania, which houses both Trustmark and Everence company business cited by HHS. But the state held Highmark to rate hikes ranging from 4.9 percent to 8.3 percent, down from 9.9 percent, HHS noted.
Today’s announcement comes the same week that a report showed that health care spending growth, while still accelerating, has grown at lower-than normal low rates (almost 4 percent) in the past two years, which was greeted as good news by many in the administration and in some states.
Also, a 2010 study released by Mercer Consulting showed higher growth in the average employee health benefit cost to businesses of almost 7 percent, after almost a decade of stable growth.
Originally published on LifeHealthPro.com