U.S. Seeks Rollback of a Health Insurer’s ‘Excessive’ Rate Increase

[babylonsister]

U.S. Seeks Rollback of a Health Insurer’s ‘Excessive’ Rate Increase
By ROBERT PEAR
Published: January 12, 2012


WASHINGTON — The Obama administration said Thursday that rate increases sought by a health insurance company were unreasonable, and it ordered the insurer to rescind them or justify its refusal to do so.

Kathleen Sebelius, the secretary of health and human services, issued the finding against the carrier, Trustmark Life Insurance Company, a unit of Trustmark Mutual Holding Company.

Ms. Sebelius said that “the excessive rate increases” would affect nearly 10,000 people in Alabama, Arizona, Pennsylvania, Virginia and Wyoming.

“It’s time for Trustmark to immediately rescind the rates, issue refunds to consumers or publicly explain their refusal to do so,” Ms. Sebelius said, wielding power granted by the new health care law.

The action fits in with White House efforts to demonstrate the value of the new health care law and to portray President Obama as fighting for the economic interests of middle-class families in this election year.

more...

http://www.nytimes.com/2012/01/13/health/policy/white-house-calls-increases-in-health-insurance-rates-too-high.html?_r=1

[Fumesucker]

1. All Trustmark will have to do is rescind the rates now..

And raise them again right after the election.

It's not like anyone will give a crap then.

[Edweird]

2. What? A government mandate to buy insurance didn't drive prices down as some claimed it would?

I don't think that anybody could have predicted that.

[SammyWinstonJack]

4. hehehe

[alc]

3. Ms. Gallaher mentions the medical loss ratio

This could be very interesting. Depending on how the government acts a few things could happen

* The government can decide that as long as 80% of premiums go to medical providers, the premiums can be raised. This gives insurers incentive to cover more procedures and have lower deductibles and co-pays. That raises the medical loss and increases premiums and is the best way for the insurers to make more profit. We are screwed if the government takes this approach since there is no incentive anywhere to lower medical costs and there is an incentive for insurers to raise the costs. The insurers' PR message will be "The health care reform bill sets the premiums based on the cost of medical care so talk to your congressman if you aren't happy with your premium." While not true, having the medical loss % in the bill will probably help them convince a lot of people.

* The government can decide that premium rates will be limited. The bill says 80% must go to medical providers, so insurers will start reducing what they cover or increase deductibles or co-pays and keep 20%. Regulators will try to stop this, but insurers will claim that it's not possible to have both low rates and good coverage unless the government does something to regulate medical care costs (i.e. heath CARE reform) Regulators on both sides (premiums and coverage) will need to hold their ground - hopefully they will do better than BP and financial regulators, but there's a good chance they won't unless we stay as interested in the regulation as we were on getting the bill passed.

* The government can decide that premium rates will be limited. The bill says 80% must go to medical providers. Insurers will start pressing medical providers for savings to insure that the same coverage still allows them to keep 80%. This was the idea behind the bill and the only option that will be good for us.