Pennsylvania health premiums will receive closer look
The federal government yesterday gave the Pennsylvania Department of Insurance a $1 million grant, which the agency will use improve oversight of health insurance premiums in the state.
The Insurance Department plans to use the money to build a health-care cost database so it can better scrutinize health insurer's requests for premium increases, as well as provide Pennsylvania consumers with more information to select insurance products and carriers, said Randy Rohrbaugh, deputy insurance commissioner.
"This will give us a better database," said Rohrbaugh, "so that when we look at companies' rate requests, we can compare them to trends in the marketplace and tell if a rate request is reasonable or not."
"We also intend to build a shoppers guide to help consumers do their insurance shopping," he said.
More detailed scrutiny of rate requests and more informed consumers should exert downward pressure on insurance premiums, said Rohrbaugh.
The federal money for clamping down on health insurance premiums arrived less than a month after the Pennsylvania Insurance Department criticized Highmark Inc. over its premium-setting practices. The company had moved its small-business customers to a for-profit subsidiary to evade regulatory scrutiny, then increased premiums as much as 79 percent.
Highmark said most of its rate increases were less than 10 percent, but that some substantial rate hikes were necessary, or the company would have had to stop writing health insurance for small businesses.
The federal Department of Health and Human Services gave a total of $46 million given to the 45 states and Washington D.C., which had requested it. The money is part of $250 million in federal money set aside for states over the next five years to implement the Affordable Care Act.
"The Obama administration made the case there are unreasonable premium increases out there, so now they are challenging the states to go out and find some," said Mark Pauley, health economist at the University of Pennsylvania's Wharton School of Business.
"It wouldn't hurt for the state to poke around and see what they could find," said Pauley. "But I'm not sure they're going to find much."
Pennsylvania's health insurers "may not be the best deals, but they're not the most expensive either," he said.
Rohrbaugh said he expects his department to build the industry database in two to three years.