- Obama downplays IRS scandal, blames Obamacare rollout on ‘outdated’ agencies
- Pregnancies decline overall, up among older women
- Pentagon plans to destroy Syrian chemical arms on ship at sea
- Paris Metro issues ‘politeness manual’ to improve passengers’ behavior
- Justin Bieber, crew detained at Australian airport in drug search
- Lee Rigby trial: Muslim who machete-hacked soldier calls it ‘humane’ kill
- GM ending Chevy sales in Europe to focus on Opel and Vauxhall
- Putin’s diplomats to U.S. busted for living high life off $1.5M bilked from Medicaid
- Happy Meal: Couple goes to McDonald’s, leaves with bag packed with cash
- Boehner: It took me 3 to 4 hours to sign up for Obamacare
Obama tells insurer to reverse rate hike
The Obama administration on Monday called on a Mennonite-owned health insurance company to cancel its proposed 11.6 percent rate hike, marking the first time the government has tried to pressure a private company under the new health care law.
While Pennsylvania-based Everence Insurance said it needs to raise rates on about 5,000 customers to cover costs, Secretary of Health and Human Services (HHS) Kathleen Sebelius called the increase “unreasonable,” holding it up as evidence that the government has an important role to play in reining in the cost of coverage.
“This sends a message to insurers around the country that the days of unchecked, double-digit increases are over,” Mrs. Sebelius said.
But Everence officials disputed the methods used by HHS to reach its conclusion, arguing that the agency calculated the plan's loss ratio over a one-year period, instead of calculating rates based on a two-year period that they said would give a better idea of gains and losses.
“The Everence experience indicates that a longer experience period reduces premium volatility, which works better for group clients,” said Vice President Dave Gautsche. “We'd welcome the opportunity to have a conversation with HHS officials about how we determine our rates.”
For their part, HHS officials accused Everence of calculating loss based on nationwide statistics instead of just within Pennsylvania. That method, they said, would have led the company to predict fewer losses — a claim Everence denies.
“The issue here was the company used the national experience, which has a much higher loss ratio than the local experience in Pennsylvania,” said Steve Larsen, a director for HHS.
With the first plan to be ruled unreasonable by the administration, Everence indicated it would not back away from the rate hike, although the Mennonite-affiliated company will be required to publicly justify it on the website healthcare.gov.
On Sept. 1, HHS began scrutinizing companies that want to significantly raise premiums. A provision in the Affordable Care Act requires insurers to notify the government and submit to a rate review when they want to hike rates by at least 10 percent — one of several measures aimed at making coverage more affordable for Americans.
States, which can either conduct the rate reviews themselves or farm it out to the federal government, are being awarded $250 million in federal grants to set up or improve their rate-review process, but the federal funding is not accompanied by enforcement authority.
Even if states or the federal government deem a premium increase to be unreasonable, they still lack the authority to reject the proposal, despite efforts by Sen. Dianne Feinstein, California Democrat, to include such a provision in the health care law.
So far, insurers nationwide have submitted 114 plans covering about 450,000 people for review, with HHS responsible for reviewing 37 of them, Mr. Larsen said. The agency has already deemed an 11 percent hike Everence is imposing on Montana customers to be reasonable.
The cost of health care coverage is an issue fraught with tension, with medical costs and premiums continuing to rise faster than the rate of inflation. The average annual premium for family coverage this year increased 9 percent over 2011, reaching $15,073 — a figure that has doubled since 2001.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
About the Author
- A familiar fading feeling for McMahon in Connecticut
- Romney’s bid to undo health law faces hurdles
- Hill GOP presses Medicare probe
- Romney, Obama advisors butt heads over binders, Big Bird and “Romnesia”
- Outsiders abide by rules in Brown-Warren race
Latest Blog Entries
- 'Hunger Games' delivers Obama's message on income inequality: liberal group
- NAPOLITANO: Pope Francis should be saving souls, not pocketbooks
- CARSON: Getting to the top by starting at the bottom
- Inside China: Nuclear submarines capable of widespread attack on U.S.
- Obama returns to class warfare as poll numbers plunge
- Hack attack: 2 million Facebook, Twitter passwords stolen
- Democratic infighting erupts over 'we can have it all' fantasy on entitlements
- U.S. pilot scares off Iranians with 'Top Gun'-worthy stunt: 'You really ought to go home'
- U.S. drops 2,000 mice on Guam by parachute to kill snakes
- CURL: 'Mission Accomplished' for Obamacare
Independent voices from the The Washington Times Communities
Interviews and show reviews from the Los Angeles punk scene past and present. Los Angeles has always been rich in punk rock talent since punk rock was born.
NFL junkie Eric Golub reports on his favorite obsession. There is no football offseason. Every February he pretends to care about other sports while sobbing uncontrollably each Sunday until September.
All of the world’s problems, solved on your back porch
Brazen, leading-edge, “call it like it is” columns and reporting from Ohio native, radio host and writer, Sara Marie Brenner.
White House pets gone wild!