Legal Newsline

Monday, August 19, 2019

HHS deems rate hikes excessive in nine states

By Michael P. Tremoglie | Mar 23, 2012

WASHINGTON (Legal Newsline) -- Health and Human Services Secretary Kathleen Sebelius says requested increases in health insurance premiums from two companies for their customers in the states of Arizona, Idaho, Louisiana, Missouri, Montana, Nebraska, Virginia, Wisconsin and Wyoming were "unreasonable."

"Thanks to the Affordable Care Act consumers are no longer in the dark about their health insurance premiums," Sebelius said March 22. "Now, insurance companies are required to justify rate increases of ten percent or higher. It's time for these companies to immediately rescind these unreasonable rate hikes, issue refunds to consumers or publicly explain their refusal to do so."

According to HHS, the insurance companies requested rate increases as much as 24 percent. The increases were evaluated by unnamed independent experts to determine their appropriateness. HHS determined the rate increases were unreasonable because of the low medical loss ratio, the percentage of premium dollars spent for actual medical care and quality improvements. HHS also believes the justifications for the rate hikes were based on unreasonable assumptions.

Sebelius also issued a new report March 22 lauding the effects of the reviews of proposed health insurance rate increases by HHS. According to her, these reviews have produced a significant benefit to consumers. During the six months the rate review program has been in effect there have been fewer double-digit rate increases.

Furthermore, she contends that more states are taking an active role in reducing rate increases - and that insurers across the nation are being more responsive to consumers. According to the announcement, as of March 10, 2012, "the justifications and analysis of 186 double-digit rate increases for plans covering 1.3 million people have been posted at HealthCare.gov, resulting in a decline in rate increases." During the last quarter of 2011, "premium increases dropped by 4.5 percent." Premiums actually declined in some states like Nevada.

But the issue of the government telling insurers how much premiums should be is a controversial one. Hans Bader is with the Competitive Enterprise Institute, a non-profit public policy organization dedicated to advocating a free market. He was critical of Sebelius' comments.

"Average profit margins in the health insurance industry are just too low for price caps to provide any meaningful relief to consumers," he said. "Instead, price ceilings - or pressure not to raise insurance rates to cover rising healthcare costs - will likely lead to fewer insurers in the insurance market, fewer choices for consumers, and more people unable to obtain private insurance."

Other insurers are getting out of the market already, Bader said. He noted that Principal Financial, which insures about 840,000 through its employer-based health insurance plans, said it would stop selling health insurance.

Want to get notified whenever we write about Competitive Enterprise Institute ?

Sign-up Next time we write about Competitive Enterprise Institute, we'll email you a link to the story. You may edit your settings or unsubscribe at any time.

Organizations in this Story

Competitive Enterprise Institute

More News