HHS cites Pennsylvania insurer's premium hike as 'excessive'

WASHINGTON—The Obama administration's first review of an insurer's planned rate changes resulted in it condemning a coming rate increase by a Pennsylvania company.

The Department of Health and Human Services announced Monday that its review of a 12% rate increase planned for the small business plan of Everence Insurance of Pennsylvania is “excessive.” The authority to review annual health insurance rate increases over 10% was granted to HHS by the Patient Protection and Affordable Care Act.

“We hope that by publicizing the excessive premium hikes, we will empower consumers,” HHS Secretary Kathleen Sebelius said in a news release. “By shining a light on unjustified premium increases, we will hold health insurers accountable like never before, and help keep money in the pockets of Americans.”

“Independent experts” determined the company based its rate increase on national cost data rather than state data, according to the HHS statement, which is what led to the high rate increase.

The 2010 health care law did not provide HHS with the authority to control the rates or sanction insurers for offering rates that federal regulators believed were not reasonable, but Sebelius and other administration officials have said they hoped the public exposure would lead to smaller 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 CMS, said in the release.

Rich Daly is a reporter at Modern Healthcare, a sister publication of Business Insurance.