Two insurers' rate hikes called 'excessive'

Two insurers' rate hikes planned for enrollees in nine states were deemed “excessive” as part of the Obama administration's latest effort to shame insurers into lowering planned rate increases.

The flagged rate increases planned by John Alden Life Insurance Co. and Time Insurance Co., both based in Milwaukee, included increases of up to 24%. Both companies are part of Assurant, based in New York City, where a spokeswoman did not respond to a request for comment.

The HHS rate review determinations, which were only the second since initial review findings announced on Jan. 12, are authorized by the Patient Protection and Affordable Care Act. The department opted to use that authority to review all planned rate increases of at least 10% to determine if they appeared justified by the insurer's underlying costs. However, HHS has no authority to block or modify the planned rate increases.

“It's time for these companies to immediately rescind these unreasonable rate hikes, issue refunds to consumers or publicly explain their refusal to do so,” HHS Secretary Kathleen Sebelius said Thursday in a news release.

Despite the lack of authority to directly affect the health insurance rates, HHS credits the review program with “helping to moderate rate increases” since it launched.

The rate increases will affect more than 42,000 policyholders in Arizona, Idaho, Louisiana, Missouri, Montana, Nebraska, Virginia, Wisconsin and Wyoming, according to HHS.

The finding was based on the insurers' plans to spend a “low percentage of premium dollars on actual medical care and quality improvements” and because the justifications were based on “unreasonable assumptions.”

The rate reviews began for most individual and small group plans on Sept. 1, 2011.

Critics contend the excessive determinations still routinely allow large double-digit rate hikes, including the 10 such increases approved for plans offered by Blue Shield of California Life and Health Insurance Co. since January.