The Obama administration has used a new tool from their healthcare overhaul to pressure a health insurer with intentions to increase its rates in Pennsylvania reduce the size of this hike.
Department of Health and Human Services officials have announced that they feel that it was “unreasonable” for Everence Insurance Co. to plan a 12 percent increase in the rates for approximately 5,000 individuals employed by small businesses within the state.
According to Kathleen Sebelius, the Health and Human Services Secretary, the intended rate increase was not adequately justified by what the insurance company predicted to pay out in health insurance claims within that state.
Sebelius explained that “We’re calling on the insurance company to immediately withdraw this rate and provide refunds or credits to any beneficiaries who have already paid the unreasonable amount.” She expects that this will be only the first of a large number of times that this step will be taken.
Everence is an insurance company based in Indiana. Its officials continue to stand by its rate hike and have argued the analysis made by the federal government, saying that their claims data review has justified the proposed increase in premiums.
Judy Martin Godshalk, a spokesperson for the insurer, has said that they do not intend to make any changes to their intentions to increase the rates, but that Everence does still welcome the federal regulators to discuss the issue with them.
President Obama’s healthcare law from 2010 does not provide the insurance regulators on a state or federal level with the authority to halt an insurance company’s rate hikes, but it does allow the government to force the insurer to justify its decision publicly.