State role in health-care rates to expand

| Wednesday, Dec. 21, 2011

Gov. Tom Corbett is expected to sign a bill that would give state regulators the authority to deny rate increases on health insurance for small businesses of 10 percent or more if they're deemed excessive.

The bill, passed by the House and Senate this month, would for the first time give the state insurance commissioner the power to review rate increases for companies with 50 or fewer employees, a requirement of the federal Affordable Care Act of 2010.

Since Sept. 1, the Department of Health and Human Services has been reviewing rate increase requests in Pennsylvania and seven other states because legislatures in those states have not provided authority over rates for small business plans. Pennsylvania and Virginia do review rates on health insurance for individuals.

HHS looked at two rate increases in the state this fall. Last month, it denied a request from Everence Insurance Co. of Goshen, Ind., for an 11.6 percent increase on small businesses it covers in Pennsylvania. A 15 percent increase proposed by Trustmark Insurance Co. of Lake Forest, Ill., is still under review.

The Pennsylvania legislation would bring the state into compliance with the health care reform law.

But state lawmakers could have gone further to keep premiums low for consumers and businesses, an advocacy group said.

The Pennsylvania Health Access Network wanted lawmakers to give the insurance commissioner authority to review all rate increases on individuals and small businesses, not just increases of more than 10 percent, said Antoinette Kraus, a project director for the Harrisburg-based coalition of 50 advocacy groups.

"Pennsylvania had a chance to do more than the bare minimum," Kraus said.

The group also wanted consumers to be able to request a hearing to challenge rate increases and provide public comments on all requests, provisions not included in the bill, she said.

"They're really missing the mark on this," she said.

The Insurance Department reviews all rate increases on plans purchased by individuals. This summer, Highmark Inc. asked the state to approve a 9.9 percent increase on a plan it sells to people with chronic medical conditions who can't get insurance elsewhere. After public opposition mounted, Highmark reduced its request to 4.9 percent for the SpecialCare plan, which the department approved in October.

The bill's sponsor, Sen. Don White, R-Indiana, views it as a step forward, said his chief of staff, Joe Pittman. White was unavailable for comment.

"Senate Bill 1336 has the blessing of the Obama administration and the Department of Health and Human Services in being in compliance with the federal health care law," Pittman said. "The reality is this bill greatly expands the insurance department's ability to review rates."

There were 236,775 small companies in the state in 2006, according to the most recent figures from the Small Business Administration. But that federal agency classifies a small business as one with fewer than 500 employees. Highmark Inc. covers about 235,000 people in Central and Western Pennsylvania through small-group plans, the insurer has said.

Most small businesses in the region would rather have state regulators, rather than Washington bureaucrats, make decisions about health insurance rates, said Thomas Henschke, president of the SMC Business Councils in Churchill.

But Henschke said many of his organization's 1,500 member companies are skeptical that rate review will do much to control their health insurance costs. Rates are going up because the cost of health care is going up, and small businesses are especially susceptible to big swings in costs if they employ people with chronic medical conditions, who are more expensive to insure, he said.

"Even though rate review would be done at the state level, that doesn't mean small businesses are going to do any better," he said.

The legislation, which does not apply to large employer plans, will require all rate-increase requests of more than 10 percent to be posted for public review on the Insurance Department's website. Once the department receives the request, it will have 45 days to approve or deny the request, or ask for more information, spokeswoman Melissa Fox said. After 45 days, if the department hasn't made a decision, the rate increase would go into effect.

Corbett intends to sign the bill pending a final review, spokeswoman Kirsten Page said.

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