HHS Secretary Kathleen Sebelius is urging state officials to re-examine any WellPoint health insurance rate increases.
States urged to scrutinize WellPoint rate hikes
In a letter sent to governors and state insurance commissioners, Sebelius noted that Anthem Blue Cross, a WellPoint affiliate, withdrew its plan to raise premiums in California by as much as 39% after auditors found the rate hikes were based on unreasonable assumptions.
“In light of this recent finding, I urge that, to the extent you have authority to do so, you re-examine any WellPoint rate increases in your state to determine whether any mistaken assumptions similar to those made in California were made in your state. Even small errors can mean unaffordable premiums for policyholders,” Sebelius wrote in her letter.
Sebelius also asked the state officials to review their authority to determine whether they had the regulatory tools to approve health insurance rates before they take effect.
“The ability to require insurers to modify an increase if a proposed rate increase is unjustified has been shown to be effective in many states. The Affordable Care Act expressly contemplates support for state efforts in rate review, appropriating a total of $250 million to states to assist in meaningful rate review. We intend to issue guidance on applying for that funding in the near future,” she wrote.
Anthem Blue Cross of California had suspended its rate increase while an independent actuary conducted a review of the rate application. The actuarial firm found five errors in the insurer's rate application, including inaccurate trend information for forecasting future medical costs. Anthem will re-file its rate application this month.
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