States Encouraged to Examine Insurers’ Rate Increases

Health and Human Services (HHS) Secretary Kathleen Sebelius wrote a letter to governors and state insurance commissioners May 4, urging them to re-examine any WellPoint, Inc. rate increases in their states. The letter was in response to a California Department of Insurance report stating that rate increases Anthem Blue Cross was proposing were based on inflated medical costs projections.

In light of the state insurance department’s report, the WellPoint subsidiary withdrew its proposal to raise rates up to 39 percent for individual policy holders residing in California.

Anthem originally intended to raise premiums for individual plans on March 1. This news got the attention of Secretary Sebelius and state officials, who asked the insurer for public justification for the increases. Anthem subsequently announced it was delaying implementation of the increases until May 1.

In the letter, Sebelius requests governors and state insurance commissioners to not just check WellPoint’s assumptions, but also to give local and state leaders the authority to review and approve insurance rate increases before they are implemented.

Sebelius said she sent the letter “to encourage governors and insurance commissioners to follow California’s example and check the math on rate increases being proposed in their states and to ensure they have the strong regulatory tools they need to fight unreasonable increases.”

To that end, the new health reform law appropriates $250 million to assist states in “meaningful rate review.” Sebelius said HHS intends to issue guidance for how states can apply for that funding in the near future.

Source: HHS May 5 press release

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