the WHITE HOUSEPresident Barack Obama

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Accountability in the States for Unfair Health Insurance Rate Hikes

Summary: 
HHS Secretary Kathleen Sebelius applauds Pennsylvania Governor Rendell for investigating alarming health insurance rate hikes and reiterates her call for other states to do the same.

We are making important progress in implementing the Affordable Care Act, helping to lower costs and give Americans more control over their own care. But unfortunately there is much work remaining to do, especially when it comes to skyrocketing insurance premiums. We learned earlier this week that Pennsylvania regulators had found a pattern of rate increases by the state’s nine largest health insurers suggesting the companies are trying to bolster revenues before health reforms take effect. Based on the regulators’ findings, the companies’ rate increases are questionable at best, and appear to have been targeting some of Pennsylvania’s most vulnerable groups through health profiling, a tool the Affordable Care Act will prohibit starting in 2014.  

I want to applaud Governor Ed Rendell and his partners in Pennsylvania for investigating the companies and fighting back against the kind of unreasonable rate increases that have made health insurance unaffordable for many American families.

I recently sent a letter to every Governor and State Insurance Commissioners encouraging them to review their state laws and work with their partners in their states to strengthen their oversight abilities. I also cited a recent example in California - where the insurance commissioner determined that a major insurer was making faulty assumptions to justify an almost 40% rate increase for more than 800,000 California residents.  In light of the company’s error, I asked officials in other states where this insurer is doing business to double check this company's math to ensure consumers don’t face faulty or unreasonable premium increases.  Given this week’s news out of Pennsylvania, I am urging states once again to provide stepped up oversight to ensure this kind of rate inflation isn't happening to their citizens.  

Several provisions in the Affordable Care Act strengthen HHS’s and states’ oversight of insurance premiums and rate hikes.  These include the Medical Loss Ratio provision requiring insurers in the individual and small group markets to spend at least 80 percent of the premium dollar on health care, and insurers in the large group market to spend at least 85 percent of the premium dollar on health care.

This week, I announced the availability of $51 million in Health Insurance Premium Review Grants through the Affordable Care Act to help states like Pennsylvania create or strengthen insurance review processes that help hold insurers accountable to consumers. These monies will fund the first round of grants available to states through a new $250 million grant program to create and strengthen state insurance rate review processes.  These grants will help empower state leaders with the resources they need to shift power away from insurers and back to families.  I encourage other states to follow Pennsylvania’s lead, and will continue to work alongside our state partners to ensure American families get the quality, affordable coverage they need, and deserve.

Kathleen Sebelius is Secretary of Health and Human Services