Taunya English’s story is part of a project on health in the states, a partnership between WHYY, NPR and Kaiser Health News.
The Obama administration’s plan to control health insurance premiums seems to include a little bit of public shaming, and some industry experts say the public pillory might work–for a little while.
The U.S. Department of Health and Human Services called out a Pennsylvania health insurance company this week for an “unreasonable” rate increase.
Temple University health economist Thomas Getzen says the government’s message to Everence Insurance is a signal to all insurance firms.
“If you scream at somebody they will usually cut prices at least for a little while,” Getzen said. “It’s worked in pharmaceuticals, it’s worked with the hospitals.”
Under the Affordable Care Act, federal actuaries step in when officials decide a state doesn’t have enough authority. So in Pennsylvania, federal officials are reviewing rate increases for the for-profit insurance companies that sell to employers with fewer than 50 workers.
Those companies are often hit with steep premium hikes because they don’t have the muscle or numbers to negotiate better rates.
The federal government can’t force a company to change rates, but if an insurer refuses, the firm has to disclose publicly a justification for the increase.
Everence may have softened some of the sting of that threat. The company has already posted a plain-language explanation for consumers, well before the HHS deadline.
The company has a niche market in Pennsylvania with fewer than 5,000 health plan holders.
After the government censure, Everence countered that the HHS finding uses a different methodology than the one used by the firm.
In a online statement, Dave Gautsche, senior vice president of products and services, said: “Everence regrets HHS made a determination on our rate increase in Pennsylvania before speaking to us. States regularly talk to insurers throughout the regulatory review process. We suggest HHS consider adopting a similar step in their new review process.”
Sam Marshall is a lobbyist with the Pennsylvania Insurance Federation. He says the term “unreasonable” is often interpreted as “excessive” or “predatory” but he says the term is just “legal jargon” for “anything the regulators think is too high.”
Craig Ritter monitors the market for his Harrisburg firm Ritter Insurance Marketing.
“I think it’s a significant sign from HHS that they intend to exert more influence on activity that was previously regulated by the state,” he said. “Maybe they can kind of jawbone down the rate increases, and score a public relations win.”
State regulators bristle when the federal government steps on their turf.
The federal rate reviews in Pennsylvania began in September. Since then, lawmakers introduced legislation to expand the Commonwealth’s authority over the commercial insurers who sell to small companies.