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CU applauds first ever federal rate review

Monday, November 21, 2011

Consumers Union Applauds First Ever Federal Rate Review

Consumers Union, the policy and advocacy division of Consumer Reports, today applauded a determination by federal regulators that a 12% rate hike on Pennsylvania small businesses is unreasonable. The Department of Health and Human Services decision shows the benefits of new consumer protections against excessive health insurance rates enacted as part of the Affordable Care Act.
“This is exactly the kind of scrutiny that is needed to ensure that rate hikes are fair and justified,” said Sondra Roberto, staff attorney for Consumers Union. “The Affordable Care Act is finally making sure that health insurers are using reasonable assumptions and providing value to their customers when they set rates.”
The Department of Health and Human Services found that the 12 percent rate increase from Everence Insurance for small businesses in Pennsylvania was excessive. The Department said that independent experts determined the choice of assumptions the company based its rate increase on reflected national data rather than reliable and available state data.
The Department has urged the company to rescind the increases and pay a refund to any customers who have already paid the new rate. If the company refuses, it will have to publicly post a justification for proceeding with the increase on its website.
The ACA provided new protections for consumers by requiring all rate hikes of 10% or more to be reviewed by state or federal regulators. States that are found to have an effective rate review program are responsible for the review. Federal regulators review increases in states that do not have effective review for certain markets. Pennsylvania does not have an effective review program for its small group market, therefore, HHS conducted the review.

Contact: Kara Kelber, 202-462-6262